Strandline Resources Limited
Annual Report 2018

Plain-text annual report

+ Annual Report 2018 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 + Annual Report 2018 + Contents + Contents .............................................................................................................................................. 2 + About Range ...................................................................................................................................... 3 + Statement from the Chairman and Chief Executive Officer .................................................... 4 + Directors’ Report ................................................................................................................................ 6 + Operational Review ......................................................................................................................... 11 + Reserves and Resources Statement ............................................................................................. 17 + Corporate Review ............................................................................................................................ 20 + Financial Review .............................................................................................................................. 22 + Corporate Social Responsibility (“CSR”) ...................................................................................... 26 + Corporate Governance and Risk ................................................................................................. 28 + Remuneration Report (Audited) ................................................................................................... 31 + Auditor’s Independence Declaration ......................................................................................... 42 + Consolidated Statement of Profit or Loss and other Comprehensive Income for the year ended 30 June 2018 ........................................................................................................................... 43 + Consolidated Statement of Financial Position as at 30 June 2018 ........................................ 44 + Consolidated Statement of Changes in Equity for the year ended 30 June 2018 ............. 45 + Consolidated Statement of Cash Flows for the year ended 30 June 2018 .......................... 46 + Notes to Consolidated Financial Statements ............................................................................. 47 + Directors’ Declaration ...................................................................................................................102 + Independent Audit Report to the Members of Range Resources Limited .........................103 + ASX additional information ..........................................................................................................106 + Corporate Directory ......................................................................................................................109 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 2 + Annual Report 2018 + About Range Range is a dual-listed (AIM: RRL and ASX: RRS) company with oil and gas projects and oilfield service businesses in Trinidad and Indonesia. The Company’s strategy is focused on growing production, reserves and revenue from its assets. The Company is led by an experienced team aligned with shareholders’ interests. Reporting period highlights • Total production 25% higher than prior year (net production of 650 bopd); Two development wells drilled; • • Production from waterflood continued to increase with average production for the period of 200 bopd; • Extensive infrastructure modernisation programme commenced; • Two acquisitions completed: Perlak oil and gas project in Northern Sumatra, Indonesia and an oilfield services business in Trinidad; Independent CPRs published on Trindad and Indonesia assets; • • Oilfield services business awarded new contract with Shell. Work • under contract safely completed; Indonesia operations commenced with two offices and a services company established; • Chief Operating Officer and Trinidad General Manager appointed; and Legacy issue in Colombia successfully resolved. • Post reporting period highlights • Oilfield services business awarded new contract with Touchstone. Work under contract safely completed; and • £1 million placement completed to accelerate growth strategy and to continue investment in infrastructure and facilities upgrade in Trinidad. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 3 + Annual Report 2018 + Statement from the Chairman and Chief Executive Officer Dear fellow shareholders It is our pleasure to present the Annual Report for the 2018 financial year. It has been a particularly busy period for our Company with the team firmly focused on demonstrating production growth from our existing Trinidad portfolio and completing value-accretive acquisitions of new assets. We believe we have succeeded with our agenda with a 25% increase in production recorded during the year - the highest annual production rate achieved by the Company in the last five years. We have also successfully completed two new acquisitions: an established oilfield services provider in Trinidad, and an onshore oilfield with historic production in Indonesia. In Trinidad, our operations were executed safely and efficiently. We place HSE practices at the forefront of our operations and strive towards continuous improvement of our safety performance, which is achieved through ongoing training, monitoring, reviews, internal controls and implementation of corrective actions. Our outstanding HSE performance continued during the year with reported LTI frequency rate significantly below the average for onshore operators in Central America and Caribbean. We have continued to demonstrate production growth from our ongoing work programme in Trinidad and were able to achieve peak production in excess of 800 bopd. Maintaining production rates at consistent levels is one of the challenges that we continue to face, particularly at the Beach Marcelle field where production has been growing over the last year. We are actively working to address this and have completed upgrades to the oil handling and storage capacity as part of infrastructure modernisation programme at the field. During the year, we have continued with our development drilling and workover programme with two new wells successfully drilled and over 250 workovers completed. At our producing Beach Marcelle waterflood project, we completed pipeline construction to provide access to additional water supply. After the year end, we have also commenced data collection on some of the selected wells as part of expansion of the existing waterflood pattern, which will include increasing the number of active producer and injector wells. Our commitment to Trinidad was demonstrated further by closing of the acquisition of the oilfield services business (RRDSL) in November. Since that time, we have been busy integrating RRDSL into the Group’s business. Our team has embarked on an active marketing campaign of RRDSL and its services which has resulted in a new contract award with Shell. This is a notable achievement for a growing business like RRDSL and is a testament to the quality of its services, HSE standards, equipment and personnel. Subsequent to the year end, RRDSL was successfully awarded a new contract with another Trinidad operator Touchstone. Our longer-term agenda is to establish RRDSL as a profitable business, servicing a wide range of counterparties in Trinidad and internationally. We are currently in discussions with Range Resources Ltd and Controlled Entities ABN 88 002 522 009 4 + Annual Report 2018 potential new E&P clients both in Trinidad and in Latin America with a view of securing further third-party work and increasing revenues for Range. In addition to RRDSL, we successfully closed an acquisition of a new upstream asset in Indonesia in October. Operations at the Perlak field commenced in May with well reactivations underway. The operator also commenced initial geological and geophysical studies and established two offices in Indonesia. Range also established an oilfield services company which will be focused on the provision of operational support and certain oilfield services to the Perlak field. Ultimately, it is intended to develop this company in a similar fashion to RRDSL to provide services to other onshore operators in Indonesia. Looking ahead, our main strategy will continue to be focused on growing production and cashflows from our assets, with a longer-term goal of transforming Range into a self- funding business generating cashflow which can be reinvested in transformational high- return opportunities. We aim to achieve this by continuing our active work programme across our enlarged portfolio and are hoping to demonstrate continued achievements during the year ahead. We would like to thank our shareholders for their support over the past year. We would also like to thank governmental stakeholders of Trinidad and Indonesia for their support and cooperation. Finally, we would like to thank our staff and fellow Directors for their commitment to the Company during another busy year as we continue work towards building Range into a profitable business. Yours faithfully Zhiwei Gu: Chairman Yan Liu: Chief Executive Officer Range Resources Ltd and Controlled Entities ABN 88 002 522 009 5 + Annual Report 2018 + Directors’ Report The Directors of Range Resources Limited (“Range” or “the Company”) and the entities it controls (together, the “Group”) present the financial report for the year ended 30 June 2018. Directors The names and details of the Company’s directors in office during the financial year and until the date of this report are as follows. The directors were in office during the entire period unless otherwise stated. Name Mr Zhiwei Gu Mr Yan Liu Mr Lubing Liu Ms Juan Wang Dr Yi Zeng Mr Yu Wang Position Non-Executive Chairman Executive Director, Chief Executive Officer Executive Director, Chief Operating Officer (appointed 1 March 2018) Non-Executive Director (resigned 1 March 2018) Non-Executive Director Non-Executive Director Non-Executive Director (resigned 26 September 2017) Mr Zhiwei Gu: Non Executive Chairman Qualifications: Interest in shares and options: LL.B, LL.M., MSc 2,083,333 ordinary shares 30,000,000 unlisted options (£0.01, 30 March 2020) Directorships held in other listed entities during the past three years None Mr Gu is an experienced corporate lawyer, who has worked with numerous companies seeking listings on various international stock markets, including the Toronto Stock Exchange and the Hong Kong Stock Exchange. He is currently a partner of Dentons, one of the largest global law firms. Mr Gu has participated in several venture capital and private equity investment cases by various funds such as London Asia Fund, Warburg Pincus, Korea Development Bank, China Venture Investment Co., and China Cinda AMC. During his time with China National Gold Group Corp., Mr Gu was in charge of mineral resource merger and acquisition activities. Mr Gu holds a LL.B. from the Jilin University in China; a LL.M. from the Northeast University in China; and a Master of Applied Finance from the Macquarie University in Australia. Mr Gu is a qualified lawyer and securities practitioner in China. Mr Zhiwei Gu is a Chairman of the Remuneration and Nomination Committee and a member of the Audit and Risk Committee. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 6 + Annual Report 2018 Mr Yan Liu: Executive Director, Chief Executive Officer Qualifications: Interest in shares and options: B.Ec, MCom 6,333,333 ordinary shares 50,000,000 unlisted options (£0.01, 30 March 2020) Directorships held in other listed entities during the past three years None Mr Liu has over 20 years of accounting and corporate advisory experience in China and Australia. Previously, Mr Liu was a partner of Agile Partners, the financial advisory company based in China and the Financial Controller at Legalwise Seminars Pty in Australia. He also spent 8 years at Chinatex Corporation where he worked in project management positions. Mr Liu holds a Bachelor degree in Economics from the Central University of Finance and Economics, China, and a Masters degree in Commerce from the University of New South Wales, Australia. Mr Yan Liu is a member of the Reserves and HSE Committee. Mr Lubing Liu: Executive Director, Chief Operating Officer (appointed 1 March 2018) Non-Executive Director (resigned 1 March 2018) Qualifications: Interest in shares and options: BSc None Directorships held in other listed entities during the past three years None Mr Lubing Liu has over 23 years of global experience in petroleum exploration, development, production, joint venture operations and new ventures. Prior to joining Range, Mr Liu held various subsurface leader roles, including Chief Reservoir Engineer with Melbana Energy Limited, Vice President of Exploration and Petroleum Technology with Sinopec East Puffin Pty Ltd, and other international exploration and production and energy service companies including ConocoPhillips, CNOOC, Woodside, RPS and Senergy. Mr Liu has extensive waterflooding experience having worked at the Penglai oilfield in China, the Chinguetti oilfield in Mauritania and Block 95 in Peru. Mr Liu holds a BSc in Petroleum Engineering from the Southwest Petroleum University, China. He is a Member of the Society of Petroleum Engineers. Mr Lubing Liu is a member of the Remuneration and Nomination and the Reserves and HSE Committees. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 7 + Annual Report 2018 Ms Juan Wang: Non-Executive Director Qualifications: Interest in shares and options: Directorships held in other listed entities during the past three years BA, MBA 2,083,333 ordinary shares 7,500,000 unlisted options (£0.01, 30 March 2020) Anterra Energy Inc. (from December 2014 to June 2016) Ms Wang was previously the President of Energy Prospecting Technology USA, Inc. and LandOcean Energy Canada Ltd. where she was responsible for overall management work for the subsidiary companies of LandOcean in Houston and Calgary. Previously, she was also an investment manager and director at Anterra Energy Inc. responsible for Chinese investor liaisons and a manager of corporate mergers and acquisitions at LandOcean. Ms Wang has a commercial banking background having previously worked for Deutsche Bank and Bank of East Asia. Ms Juan Wang is the Chairperson of the Audit and Risk Committee. Dr Yi Zeng: Non-Executive Director Qualifications: BSc; MSc; PhD Interest in shares and options: Directorships held in other listed entities during the past three years None None Dr Yi Zeng has over 30 years of experience in the oil and gas and mining industries. Dr Zeng has held various technical and research positions with global companies including BHP Billiton and Santos Asia Pacific. Dr Zeng holds a PhD in Geophysics from the Victoria University of Wellington, New Zealand, an MSc in Applied Geophysics and a BSc in Geophysical Exploration from the Chengdu University of Technology, China. Dr Yi Zeng is a Chairman of the Reserves and HSE Committee and a member of the Remuneration and Nomination and the Audit and Risk Committees. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 8 + Annual Report 2018 Mr Yu Wang: Non-Executive Director (resigned 26 September 2017) Qualifications: Interest in shares and options: BSc; MSc None Directorships held in other listed entities during the past three years None Mr Wang has over six years of corporate experience in finance and investments, focusing on energy and mineral sectors. He is currently a senior investment manager at Shanghai Anjin Investment Co. Ltd., responsible for project investments and management, both domestically and overseas. Previously, he worked as an investment manager at Weihai International Economic & Technical Cooperative Co., Ltd, specialising in project analysis and evaluation of energy and mineral projects in Africa, including oil and gas projects in the Republic of the Congo. Prior to that, Mr Wang was an investment analyst at Beijing Golden Valley Investment Management Co., Ltd. Mr Wang holds an MSc in Economics from the University of Edinburgh, and a BSc in Financial Economics from the University of Dundee. Company Secretary The following persons held the position of company secretary during the financial year: • Mr Nick Beattie • Ms Sara Kelly Mr Nick Beattie: Joint Company Secretary Qualifications: Interest in shares and options: BA (Hons), FCIBS, AMCT 2,916,667 ordinary shares 25,000,000 unlisted options (£0.01, 30 March 2020) Directorships held in other listed entities during the past three years None Mr Nick Beattie has over 25 years of experience in finance working with a range of international banks. Most recently he was a Managing Director in the BNP Paribas Upstream Oil and Gas team in London where he was responsible for leading the bank relationships with UK focused independent E&P companies. Nick has over 10 years’ experience specifically financing the E&P sector and whilst at BNP Paribas, he structured and led numerous reserve based loans, development financings and other debt facilities. Prior to working with BNP Paribas, Nick worked as a Director within the Oil and Gas finance team at Fortis Bank covering Europe, Middle East and Africa and in a variety of roles with National Australia Bank Group. Nick is an Associate Member of the Association of Corporate Treasurers, a Fellow of the Chartered Institute of Bankers in Scotland and a Member of the Chartered Institute for Securities and Investment. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 9 + Annual Report 2018 Ms Sara Kelly: Joint Company Secretary Qualifications: Interest in shares and options: B.Com, LLB 1 ordinary share Directorships held in other listed entities during the past three years Drake Resources Limited (appointed June 2017) Ms Sara Kelly is an experienced Company Secretary and Corporate Lawyer with over 13 years’ experience. Sara has comprehensive knowledge of and experience in administering regulatory frameworks and processes in a listed company environment and practised as a corporate lawyer specialising in acquisitions, takeovers, capital raisings and listing of companies on ASX and AIM. Sara has acted as the company secretary of a number of ASX listed companies. Sara is a partner at Edwards Mac Scovell, a boutique Western Australian legal practice based in Perth. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 10 + Annual Report 2018 + Operational Review Principal Activities The principal activity of the Group during the financial year was oil and gas exploration, development and production in Trinidad. During the year, the Company also acquired two new assets: an oil and gas project in Indonesia and an oilfield services business in Trinidad. Production The Group’s oil and gas production for the year was 237,352 barrels (average of 650 bopd) net to Range, which is a 25% increase in production from the previous year (2017: 522 bopd). Range is pleased to be reporting production growth during the period which is mainly attributed to the ongoing work programme at the Beach Marcelle field. Range had been facing challenges in maintaining production rates at consistent levels largely due to the limitations associated with the infrastructure at the Beach Marcelle field. To resolve this and accommodate production growth, the Company initiated infrastructure modernisation programme at the field. As part of this programme, the Company completed an upgrade to its oil handling and storage facilities. + Installation of a new storage tank Reserves During the period, the Company published independent Competent Person's Reports (“CPRs”) on its Trinidad and Indonesia assets. The Trinidad CPR which was completed by Rockflow Resources Ltd confirmed net 2P reserves of 16 MMstb and net 2C contingent resources of 8 MMstb. The Indonesia CPR which was completed by LEAP Energy Partners Sdn Bhd confirmed net 2C contingent resources of 10.9 Bscf and 3.1 MMstb. The CPRs are available on Range’s website: http://www.rangeresources.co.uk/operations/reserves-and-resources/. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 11 + Annual Report 2018 Trinidad Health, Safety and Environment (“HSE”) The health and safety of our people, contractors and communities are important to us. We aim to achieve a safe and healthy work environment by upholding industry best practice and enforcing robust safety procedures at all of our operating sites. We manage our activities in order to minimise disturbance to the environment, utilising environmental standards consistent with developments in technology, industry, codes of practice and all relevant statutory requirements. We require our employees and contractors to undertake their work in an environmentally sound manner and to consider environmental protection. During the year, the Company continued its focus on safe operations. The Company is pleased to report that its average Lost Time Incident (“LTI”) frequency rate for the year of 0.43 is significantly below the average of 2.5 reported by the International Association of Drilling Contractors for the onshore operators in Central America and Caribbean. The Company notes that the LTI frequency rate was higher during the second half of FY 2018. The Company has been working with its supervisors and the HSE department to address this and has been conducting daily tool box sessions, job safety analysis and safety meetings. Range also established a Reserves and HSE committee which is responsible for overseeing the health, safety, and environmental management within the Group’s operations. HSE Activity (12 month rolling average) 2.0 1.0 e t a r e c n e d c n i I 0.0 Jul '17 Aug '17 Sept '17 Oct '17 Nov '17 Dec '17 Jan '18 Feb '18 Mar '18 Apr '18 May '18 Jun '18 No. of Employee Hours Lost Time Incident (frequency) First Aid Material Loss (equipment and property damage) Near Miss Environmental Spills 65000 55000 45000 35000 25000 15000 d e k r o w s r u o h e e y o p m e l l a t o T 5000 -5000 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 12 + Annual Report 2018 Waterflood programme During the year, the Company continued production from two waterflood projects: the South East area of Beach Marcelle field (the "SE Project") and parts of the Morne Diablo field. The average combined production rate from waterflood projects for the year was approximately 200 bopd. At the SE project, the Company completed pipeline construction to connect to an additional water source of 700 bwpd. It has been challenging to maintain injection rates at a consistent level and these continued to fluctuate with peak injection of 1,450 bwpd. The Company completed repairs on the existing pumps which should allow for stabilised water injection rates of 1,500 bwpd. Range is also looking to undertake expansion of the SE project to incorporate more producer and injector wells. The expanded plan envisages up to 11 additional producers and 6 injector wells across the SE Project. The programme is expected to deliver enhanced production during early 2019. + Waterflood operations Development drilling During the year, the Company drilled two new development wells, the GY 684 well located at the Beach Marcelle field and the QUN 161 well located at the Morne Diablo field. The wells were drilled safely and efficiently by RRDSL. Both wells were successful, and costs were capitalised in relation to these. The Company is particularly encouraged by the results of the GY 684 well, which is one of the best producing wells drilled by Range in recent years in Trinidad. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 13 + Annual Report 2018 +The GY 684 well on production at the Beach Marcelle As part of the upcoming work programme, the Company is planning on drilling two new development wells located on the North-East area of the Beach Marcelle field. The North- East area has an estimated 3.5 mmbbls of oil in place, of which only 6% has been recovered to date. The Company estimates that at least a further 10% could be produced from the area through primary recovery (additional 0.3 mmbbls). The wells are planned for drilling once the majority of the sales infrastructure upgrade at the Beach Marcelle field is completed. The first well is planned for drilling in Q4 2018 and the second well in 2019. In addition, Range intends to acquire a new geological tool which will allow for enhanced data acquisition. This will assist in prioritising the lowest risk and highest return drilling prospects and allow the Company to move towards an active shallow drilling programme. Optimization / workovers The Company continued to undertake workovers on selected wells to provide additional production. Over 250 workovers on the existing wells have been completed during the year. The Company plans to continue its workover programme for the remainder of 2018. Outlook and the upcoming work programme Range’s planned work programme in Trinidad for the remainder of 2018 (calendar year) is targeting stable production and includes: 1. Sales facilities upgrade at the Beach Marcelle field comprising: • Addition of a new tanker truck unit; Installation of a new transfer station; • Installation of a new 500-barrel settling tank; • Installation of a new LACT unit; and • • Upgrade on two 500-barrel sale tanks. 2. Optimisation (workovers) on approximately 50 wells 3. Optimisation of SE waterflood project 4. Drilling one new development well 5. New geological tool studies Range Resources Ltd and Controlled Entities ABN 88 002 522 009 14 + Annual Report 2018 In-house oilfield business - RRDSL Since the acquisition of RRDSL in Q4 2017, Range has been focused on integrating the business into the Group. Range’s objective is to reduce the operating costs associated with its upstream operations in Trinidad and increase upon the existing levels of business with other operators to provide additional revenue stream. During the year, RRDSL was successfully awarded a new contract with Shell Trinidad Central Block Limited, a subsidiary of Royal Dutch Shell plc ("Shell"). The work scope under the contract consisted of a one-well workover using RRDSL’s Rig 19 at Shell's operations onshore Trinidad. Operations were safely completed during April 2018 with no HSE or LTI incidents recorded. + RRDSL’s rig at operations for Shell Subsequent to the year end, RRDSL was successfully awarded a new contract with Touchstone Exploration Trinidad Limited, a subsidiary of Touchstone Exploration Inc ("Touchstone"). Under the work scope of the contract, RRDSL provided turnkey services for drilling one well on Touchstone's onshore WD8 block in Trinidad. The drilling operations were safely completed. With over 15 E&P companies operating onshore Trinidad, the Company sees significant opportunity to expand third party customer base in the country. In addition, Range is in discussions with potential clients in Latin America and is hoping to secure further third- party work. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 15 + Annual Report 2018 Indonesia Since completion of the acquisition of interests in the Perlak field on 30 October 2017, the Company has been working with its partners on expediting the agreed work programme. The operator commenced initial geological and geophysical studies and established two offices in Indonesia. Range also established an oilfield services company which will be focused on the provision of operational support and certain oilfield services to the Perlak field and ultimately it is intended to develop this company in a similar fashion to RRDSL and provide services to other onshore operators in Indonesia. Operations at the Perlak field commenced in May 2018, with reactivations on two wells underway. The initial production and well performance are below the original expectations, however work is still underway to establish stable production. Looking ahead, Range intends to undertake G&G studies to improve reservoir understanding and to assist in establishing a longer-term development plan for the field. + Operations at the Perlak field Range Resources Ltd and Controlled Entities ABN 88 002 522 009 16 + Annual Report 2018 + Reserves and Resources Statement Reserves As at 30 June 2018, Range’s net proved and probable reserves (2P) are assessed to be 15.2 million barrels of oil (MMbbl). The key factors attributing to the revision in reserves are: • Production during the period; and • Amended timing for waterflood activity and drilling. Reserves as at 30 June 2018 (MMbbl): Category Proved (1P) Proved & probable (2P) Proved, probable & possible (3P) Developed Undeveloped Total 3.1 6.2 9.3 4.9 10.3 15.2 6.4 15.5 21.9 1. The reserve figures (1P, 2P and 3P) include reserves associated with the Company’s Morne Diablo, South Quarry and Beach Marcelle licences in Trinidad. Range’s net interest in all three fields is 100%. 2. Competent Persons Report (“CPR”) prepared by Rockflow Resources Ltd, effective 30 June 2017 was used as a basis for estimation of the reserve figures. 3. Range’s Morne Diablo and South Quarry fields are operated under farm-out agreements, with rights to production net of Trinidad government royalties, overriding royalties, and production taxes. 4. Range’s Beach Marcelle field is operated under the terms of an Incremental Production Service Contract, entitling Range to a defined portion of the future revenue stream. No oil and gas reserves are owned by Range. Movement in reserves (MMbbl): Category Proved (1P) Reserves as at 30 June 2017 FY 2018 production Revisions Reserves as at 30 June 2018 10.0 -0.2 -0.5 9.3 Proved & probable (2P) Proved, probable & possible (3P) 16.0 -0.2 -0.6 15.2 22.9 -0.2 -0.8 21.9 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 17 + Annual Report 2018 Contingent resources As at 30 June 2018, Range’s net contingent resources 2C (P50) are assessed to be 12.9 million barrels of oil equivalent (MMboe). The key factor attributing to the increase in contingent resources is the inclusion of the Indonesia assets. Contingent resources as at 30 June 2018: Category Project Trinidad (net 100 %) Indonesia (net 23%) Total 1C 2C 3C Gas Bscf Oil MMbbl Total MMboe Gas Bscf Oil MMbbl Total MMboe Gas Bscf Oil MMbbl Total MMboe - 4.6 4.6 - 8.0 8.0 - 15.4 15.4 1.7 0.9 1.2 10.9 3.1 4.9 41.1 18.4 25.3 1.7 5.5 5.8 10.9 11.1 12.9 41.1 33.8 40.7 1. The Trinidad resource figures (1C, 2C and 3C) include contingent resources associated with the Company’s Morne Diablo, South Quarry and Beach Marcelle licences in Trinidad. Range’s net interest in all three fields is 100%. 2. The Trinidad resource figures are based on the CPR prepared by Rockflow Resources Ltd, effective 30 June 2017. 3. The Indonesia resource figures (1C, 2C and 3C) include contingent resources associated with the Company’s interest in the Perlak field. Range’s net interest is 23%. 4. The Indonesia resource figures are based on the CPR prepared by LEAP Energy Partners Sdn. Bhd, effective 1 August 2017. 5. The interest in the Indonesia project was acquired during FY2018, therefore contingent resources for FY2017 do not include Indonesia resources. 6. The conversion factor used for converting gas to oil equivalent volumes is 6,000 scf to 1 boe. Movement in contingent resources (MMboe): Category Contingent resources as at 30 June 2017 Revisions Contingent resources as at 30 June 2018 1C 4.6 +1.2 5.8 2C 8.0 +4.9 12.9 3C 15.4 +25.3 40.7 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 18 + Annual Report 2018 Notes on calculation of reserves and resources • The reserves and resources stated in this report are prepared in accordance with the definitions and guidelines in the Society of Petroleum Engineers (SPE) 2007 Petroleum Resources Management System (PRMS). • Range reviews and updates its oil and gas reserves and resources position on an annual basis and reports the updated estimates as of 30 June each year. Separately, Range reviews and updates its oil and gas reserves and resources position as frequently as required by the magnitude of the petroleum reserves and resources and changes indicated by new data. The reserve and resource figures are reported according to Range's net economic interest, net of royalties and net of lease fuel up to the reference point. The reference point defined as the point of sale to third parties. • • Petroleum reserves and resources are prepared using deterministic and probabilistic • methods. Totals may not exactly reflect arithmetic addition due to rounding. • Project and field totals are aggregated by arithmetic summation by category. • • Oil and gas reserves estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates that were valid when originally calculated may alter significantly when new information or techniques become available. Additionally, by their very nature, reserve and resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional drilling and analysis, the estimates are likely to change. This may result in alterations to development and production plans which may, in turn, adversely impact the Company's operations. Reserves estimates and estimates of future net revenues are, by nature, forward looking statements and subject to the same risks as other forward-looking statements. Qualified person review The information contained in this report has been reviewed and approved by Mr Lubing Liu. Mr Liu is a suitably qualified person with 23 years of industry experience. Mr Liu is a full- time employee of Range and holds a role of a Chief Operating Officer and Trinidad General Manager. He holds a BSc in Petroleum Engineering from the Southwest Petroleum University, China and is a member of the SPE (Society of Petroleum Engineers). Mr Liu is qualified in accordance with ASX listing rule 5.41 and consents to the use of petroleum reserve and resource figures in the form and context in which they appear in this statement. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 19 + Annual Report 2018 + Corporate Review Completion of acquisition of RRDSL Range completed the acquisition of RRDSL on 30 November 2017. The net consideration of US$3.2 million is due by no later than 30 November 2020 and is subject to 6% interest per annum. In December 2017, Range advanced a partial payment of US$2.8 million to LandOcean Petroleum Corp. Ltd as part of the consideration for the acquisition. The payment is on a refundable basis and the funds will be immediately repayable to Range upon the Company's request. This early, refundable payment benefits Range as it accrues interest at 6%, generating a saving of almost US$100,000 for the Company during the period. Please refer to Operations section for further details on RRDSL. Completion of acquisition of oil and gas interests in Indonesia Range completed the acquisition of an indirect interest in the Perlak field on 30 October 2017. As per the terms of the acquisition, the Company acquired an indirect 23% interest (to increase to 42% upon completion of the minimum work programme) for a total consideration of US$3.2 million payable in tranches. Please refer to Operations section for further details on the project. Director and management changes Mr Yu Wang tendered his resignation as Non-Executive Director, effective 26 September 2017. Mr Lubing Liu was appointed as Group Chief Operating Officer and General Manager of Trinidad, responsible for overseeing the Company's upstream and oilfield services operations focusing on Trinidad. Mr Lubing Liu also assumed a role of Executive Director. These appointments were effective 1 March 2018. Admission to trading on Alternative Investment Market (“AIM”) The Company’s ordinary shares were admitted to trading on AIM effective 13 December 2017, under the ticker "RRL". The Company published an admission document which can be viewed on Range’s website www.rangeresources.co.uk. Termination of American Depository Receipt ("ADR") programme The Company terminated its ADR programme as part of continued cost cutting exercise. Successful resolution of the legacy issue in Colombia The Company reached an agreement with Agencia Nacional de Hidrocarburos ("ANH") to settle all outstanding historic claims and disputes between ANH and the consortium of Optima Oil Corporation and the Company (the "Consortium"). The key terms of the settlement arrangement are that ANH confirms that Range (and the Consortium) has no liability for any payments or debts, all proposed penalties have been lifted, the Consortium agrees to waive all potential claims against ANH and the consortium agrees to the termination of the exploration licences. The agreement between the Consortium and ANH is subject to court approval in Colombia, which is expected in FY19. The matter is still contingent until this approval is obtained. Range also commenced the process of Range Resources Ltd and Controlled Entities ABN 88 002 522 009 20 + Annual Report 2018 closing its Colombian branch office which is expected to result in cost savings of approximately US$100,000 per annum. Georgia Range believes that it holds an interest in the Georgia Production Sharing Contract over Block VIA (the “Georgia PSC”) through its 45% shareholding in Strait Oil and Gas Limited (“SOG”). On 3 April 2017, the Government of Georgia represented by the LEPL State Agency of Oil and Gas of the Ministry of Energy of Georgia (the “Agency”), announced an open international tender on Block VIA. Range has been involved in the project since 2009 and invested substantial capital since that time with funds used to complete the minimum work programme stipulated by the Georgia PSC. The Agency has previously confirmed to SOG that this minimum work programme has been satisfactorily completed. Range believes that the Georgia PSC remains valid and in good standing and that the purported relicensing of the block would be a breach of the Georgia PSC. Range and SOG contacted the Agency to seek an amicable resolution to this issue and engaged legal advisers to explore relevant routes to preserve the value of the investment in Georgia. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 21 + Annual Report 2018 + Financial Review Summary of financial performance for the year For the year to 30 June 2018, the Board is pleased to report a significant improvement in the financial performance with a materially reduced loss after tax of US$17.5 million compared to a loss in the prior year of US$54.4 million. Whilst still disappointing to be reporting a loss, the Directors believe there has been positive progress seen in several key areas, including: • Revenues: 55% higher at US$13.1million (prior year US$8.4 million) with 97% of revenues coming from upstream operations; • Production: 25% higher at 237,352 barrels (prior year: 190,546 barrels); • Realised oil price: 25% higher at US$55.40/bbl (prior year: US$44.27/bbl); • • General and administration expenses: 21% lower at US$4.1 million (prior year First revenues generated by RRDSL from 3rd party drilling work; US$5.2 million). This includes one-off costs of US$0.75 million related to the AIM listing process completed during the year, so on an underlying basis the spend was lower still at US$3.3 million (a 36% reduction); and • Operating expenses for Trinidad upstream operations of US$6.2 million, representing US$26/bbl which is a 43% improvement on prior year (prior year: US$46/bbl). During the year, Range continued to invest in growing the asset base of the Group with US$3.9million capital expenditure in Trinidad in drilling, waterflood and workover activity. In addition to the activity undertaken at the core Trinidad fields the Group also completed two important acquisitions. With the Perlak field in Indonesia, Range has invested approximately US$3.8 million during the year to firstly acquire its 60% interest in Hengtai and then to fund its share of the operating costs during the first year of operation. The RRDSL acquisition which completed at the end of November 2017 is particularly significant as it allows us to have greater control over operating and drilling costs in Trinidad and the benefits of this acquisition have already been seen with the total cost for drilling the GY684 well in late 2017 being over 1/3rd cheaper than the cost of drilling the comparable GY681 well. Since the date of the acquisition, RRDSL has also been actively marketing its services to 3rd parties with revenues generated during the year of approximately US$430,000 from other operators. During just the first quarter of FY2019, RRDSL has already exceeded this level of turnover and the Company aims to continue to grow this 3rd party revenue stream with operators in Trinidad and the surrounding Caribbean/Latin America region. Total operating costs for the Group have increased during the period to US$10.8 million (prior year: US$8.8 million). This is a result primarily of the new business activities undertaken during the period with substantially higher staff costs of the Group following the acquisition of RRDSL which were approximately US$2.6 million higher in 7-month period following the acquisition. The underlying operating costs for the Trinidad upstream business were lower during the year at US$6.2 million (prior year: US$8.8 million). In addition, the Company anticipates that further revenue growth should be seen from additional 3rd party work undertaken by RRDSL and first modest sales volumes being achieved at Perlak, Indonesia. Despite the increase in operating costs for the period Range Resources Ltd and Controlled Entities ABN 88 002 522 009 22 + Annual Report 2018 there has been a 24% improvement in EBITDAX, which showed a negative US$6.0 million for the year (prior year: negative US$7.9 million). It is important to highlight that this is the first financial year since 2013 where there has been no impairment charge recognised and the Board continues to see significant value in the Trinidad asset base which can be released in the years ahead as production growth is delivered. Liquidity Cash management remains a critical area of focus and at the period end the Group had cash on hand and other liquid assets of US$6.7 million (including the US$2.8 million refundable deposit which was paid to LandOcean with respect to the RRDSL acquisition in December 2017). Post-reporting period, Range completed an equity placement raising gross proceeds of GBP1 million. Despite the increased production and revenues, the cash position has clearly reduced during the year and this is a result of a number of factors which included: (i) the acquisition and subsequent investment into the Perlak project totalling US$3.8 million, (ii) provision of loans pre-acquisition to RRDSL of US$4 million, (iii) payment of first year coupon on convertible note of US$1.6 million and (iv) the costs incurred with the AIM admission process. The acquisition of RRDSL is the principal reason for the increase seen in the level of net borrowings and other interest-bearing payables to US$87 million (2017: US$61.9 million). Range continues to benefit from highly competitive terms offered by LandOcean across the various funding arrangements with no security provided over any assets, no financial covenants or restrictive controls in place, no amortisation due until maturity and a competitive interest rate of between 6-8% pa. The Board recognises though that the maturity profile for the debts has reduced over the year with average period to maturity of approximately 17 months and the first repayments being due at the end of November 2019. Range has held initial discussions with LandOcean regarding potential refinancing options and the Company will be considering the most appropriate means to repay or refinance the balance during the coming months. Outlook Range will continue to invest in the year ahead into growing production at Trinidad and Indonesia. In the short-term this includes upgrades to infrastructure and drilling of a new development well at Beach Marcelle before the end of the 2018 calendar year. The Board remains focused on achieving long-term profitability and positive operating cashflow through growth in revenues from increased production whilst maintaining a tight control over costs. Fundamentally, production growth remains the key to reducing operating costs on a per barrel basis, given the inherent fixed cost element within the operations in Trinidad and the Board expects to see growth in the coming year from development drilling activity, optimisation of existing waterflood schemes and the benefits seen from new infrastructure and debottlenecking at the Beach Marcelle field. In addition, during FY2019 a key financial objective is to secure appropriate terms for repaying and/or refinancing the payables position with LandOcean. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 23 + Annual Report 2018 Dividends No dividends have been declared, provided for or paid in respect of the financial year ended 30 June 2018 (2017: Nil). Significant Changes in State of Affairs The following significant changes in the state of affairs of the Company occurred during the financial year: Acquisition of RRDSL Range completed the acquisition of RRDSL on 30 November 2017. The net consideration of US$3.2 million is due by no later than 30 November 2020 and is subject to 6% interest per annum. Acquisition of oil and gas interests in Indonesia Range completed the acquisition of an indirect interest in the Perlak field on 30 October 2017. As per the terms of the acquisition, the Company acquired an indirect 23% interest (to increase to 42% upon completion of the minimum work programme) for a total consideration of US$3.2 million payable in tranches. Events Subsequent to Reporting Date Completion of US$1.3m subscription Subsequent to the year end, Range announced a subscription for new ordinary shares to raise US$1,300,000 before expenses (the "Subscription"). Pursuant to the Subscription, the Company issued 909,090,910 new ordinary shares at a price of 0.11 pence per new ordinary share. The Company intends to use the proceeds from the Subscription to fund sales infrastructure upgrade, as well as other general investment in asset upgrades in Trinidad. RRDSL new contract award Subsequent to the year end, Range announced that RRDSL was successfully awarded a contract with Touchstone Exploration Trinidad Limited, a subsidiary of Touchstone Exploration Inc ("Touchstone"). Under the work scope of the contract, RRDSL provided turnkey services for drilling one well on Touchstone's onshore WD8 block in Trinidad. Georgia update Subsequent to the year end, Range signed an agreement to acquire Georgian Oil Pty Ltd (20% interest holder in SOG) for a nominal upfront sum. Following completion, Range will hold a 65% interest in SOG. Completion is anticipated to occur in October 2018. No other events occurred after the reporting date. Likely Developments and Expected Results The Company intends to progress with its work programme in Trinidad by implementing the secondary recovery programme (waterflood), development drilling and workover operations. The Company will also focus on growing its oilfield services business in Trinidad by expanding its third-party customer base. In Indonesia, Range will continue work with Range Resources Ltd and Controlled Entities ABN 88 002 522 009 24 + Annual Report 2018 the operator to successfully execute the work programme. Please refer to the Operational Review for full details. Environmental Regulation The Group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory. The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which requires entities to report annual greenhouse gas emissions and energy use. The directors have assessed that there are no current reporting requirements, but may be required to do so in the future. Options As at 30 June 2018, the unissued ordinary shares of Range under option are as follows: Date of expiry 14 July 2018 14 July 2018 31 August 2018 3 September 2019 3 September 2019 30 March 2020 Exercise price £0.01 £0.02 £0.01 £0.01 £0.02 £0.01 Number under option 161,472,247 118,729,593 14,000,000 194,585,862 172,557,274 120,500,000 Total: 781,844,976 During the year ended 30 June 2018 no ordinary shares of Range were issued on the exercise of options (2017: nil). Meetings of Directors During the financial year, six meetings of the board of directors were held. Attendances by each director during the year were as follows: Director Zhiwei Gu Yan Liu Juan Wang Lubing Liu Yi Zeng Yu Wang (resigned 26 September 2017) Board Meetings Eligible to attend 6 6 6 6 6 2 Attended 6 6 6 6 6 0 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 25 + Annual Report 2018 + Corporate Social Responsibility (“CSR”) Range is committed to conducting business in a socially responsible and ethical manner, protecting the environment and the safety of local communities, engaging, respecting and supporting the communities and cultures it operates in. Range strives to grow and strengthen the social and economic relationships within the communities it operates in, through the support and employment opportunities, as well as innovative programmes in local health, education, environment, and cultural activities. Range recognises the need for its business to provide direct support to the local communities which rely on sponsorships and donations. Range has commitment to hiring locally and aims to work closely with our host governments. Over the years, Range has continued to be involved in numerous community initiatives supporting local talent and progressing employment. Supporting education Over the years Range has been engaging with the Guayaguayare Roman Catholic Primary School, located near the Company’s Beach Marcelle field in an effort to assist the young people living in the area. During the year, Range provided three scholarship grants to the top performing students, as well as stationery supplies to the school. + Students awarded a scholarship grant Supporting musical talent Range continues its support for the Morne Diablo Funk-a-delics, a steel orchestra for youth. The programme provides music lessons to children where they learn to play the steel pan (Trinidad and Tobago’s national musical instrument) and to read music. During the year, Range provided financial assistance to the Morne Diablo Funk-a-delics towards the purchase of uniforms. Range also continues to provide oil drums to be used as steel pans for music practice. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 26 + Annual Report 2018 Training and development of young professionals During the year, Range participated in the Trinidad and Tobago Section of the Society of Petroleum Engineers event. The event provided a forum for the engagement, enlightenment and education of engineering and geoscience students and graduates from the local universities of Trinidad and Tobago. Companies such as Range were given the opportunity to meet young local talent, share experience and knowledge, provide guidance and attract future employees. Range continues to investigate options for incorporating students from the local universities into its operations through training and work placement. Range will continue its contribution to development of young local professionals in years to come. + Society of Petroleum Engineers event Range Resources Ltd and Controlled Entities ABN 88 002 522 009 27 + Annual Report 2018 + Corporate Governance and Risk The Company has chosen to adopt the Corporate Governance Principles and Recommendations (3rd Edition, March 2014) issued by the ASX Corporate Governance Council in respect of the financial year ended 30 June 2018 and complies with the majority of recommendations. The Company’s 2018 Corporate Governance Statement, Appendix 4G and other ancillary corporate governance related documents can be found on the Company’s website: www.rangeresources.co.uk. Principal risks and uncertainties The achievement of the business strategy, production growth and future financial performance are subject to various risks. Range continually monitors the effectiveness of the Company’s risk management, internal compliance and control systems. The Board does not have a stand-alone Risk Committee. However, the Company’s Audit and Risk Committee oversees the Company’s risk management and compliance function, with key responsibilities being to ensure that an appropriate risk management framework is in place and is operating properly and reviewing and monitoring legal and policy compliance systems and issues. The Board has identified the following principal business risks and adopted mitigating strategies as described below. It is not an exhaustive list of all risks that may affect the Company nor have they been listed in any particular order of importance. + Risk Exploration, development and production There is a significant element of technical risk in exploring for and developing oil and gas fields. Exploration is a speculative activity with an associated risk of discovery to find any oil and gas in commercial quantities and a risk of development. If the Company is unsuccessful in locating and developing or acquiring new reserves and resources that are commercially viable, this may have a material adverse effect on future business, results of operations and financial conditions. Development and production of oil and gas projects may be exposed to low side reserve outcomes, cost overruns, production decrease or stoppage, which may result from facility shutdowns, mechanical or technical failure and other unforeseen events. + Mitigation The Company aims to continuously improve the quality of its operations through rigorous reviews. Technical work processes are used to ensure each opportunity has been thoroughly evaluated before investment decisions are made. The Company employs experienced personnel and engages independent consultants to review data, where appropriate. Oil and gas reserves + Risk Oil and gas reserves are expressions of judgement based on knowledge, experience and industry practice. These estimates may alter significantly or become uncertain when new information becomes available and/or there are material changes of circumstances which may result in the Company altering its plans which could have a positive or negative effect on the Company’s operations. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 28 + Annual Report 2018 + Mitigation Range has established Reserves and HSE committee which undertakes annual audits and evaluations of the Company’s reserves and resources consistent with the Society of Petroleum Engineers’ Petroleum Resource Management System. The assessment of reserves and resources is also subject to independent review from time to time. Health, Safety and Environment + Risk Exploration, development and production of oil and gas involve risks which may impact the health and safety of personnel, the community and the environment. Oil and gas exploration, development and production can be potentially environmentally hazardous giving rise to substantial costs for environmental rehabilitation, damage control and losses. Failure to manage these risks could result in injury or loss of life, damage or destruction of property, damage to reputation, and damage to the environment. + Mitigation Health and safety are a very high priority for Range. Range has established reserves and HSE committee which is responsible for ensuring that appropriate systems are in place to manage health, safety, and environmental risks. The Company maintains strict reporting requirements in respect of any incidents, hazards or near misses. Training, procedures and competency are performed throughout the organisation. Appropriate insurances are in place. Regulatory + Risk A substantial amount of Range’s properties and operations are located in Trinidad and Tobago. Therefore, the Group’s operational and financial conditions are affected by policy, taxation and other political or economic developments in or affecting Trinidad and Tobago. There is a risk that regulatory approvals are withheld, take longer than expected or unforeseen circumstances arise where requirements may not be adequately addressed in the eyes of the regulator and costs may be incurred to remediate non-compliance and/or obtain approvals. + Mitigation Range continuously monitors the political, economic, and regulatory environments in which it operates and actively cooperates with the government of Trinidad and Tobago on strategies that might impact the Company. Funding + Risk Future investment and activities are dependent on having sufficient funds to enable the exploration or development of projects, whether through debt or equity funding. Limitations on the access to adequate funding could have a material adverse effect on the business, results from operations, financial condition and prospects. There can be no assurance that sufficient debt or equity funding will be available on acceptable terms or at all. + Mitigation The Board reviews and approves the allocation of cash resources via the annual budget. The Board also considers longer term cash forecasts to ensure sufficient funds to meet its goals. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 29 + Annual Report 2018 Oil and gas prices + Risk Future value, growth and financial conditions are dependent upon the prevailing prices for oil and gas. Prices for oil and gas are subject to fluctuations and are affected by numerous factors beyond the control of the Company. Sustained periods of low oil price may impact the viability of growth projects. + Mitigation The Company monitors and analyses the current and forecast oil prices on a regular basis. Range does not currently hedge its oil price exposure. Price hedging arrangements would be implemented if deemed appropriate for financial planning and to mitigate commodity price risks. Counterparties + Risk The ability of the Company to achieve its stated objectives will depend on the performance of the counterparties under various agreements it has entered into, including joint venture arrangements. If any counterparties do not meet their obligations under the respective agreements, this may impact on operations, business and financial conditions. + Mitigation The Company monitors performance across material contracts against contractual obligations to minimise counterparty risk and seeks to include terms in agreements which mitigate such risks. + Risk Litigation The nature of Range’s business means that it is likely to be involved in litigation or regulatory actions arising from a wide range of matters, as well as investigations, inquiries or disputes, debt recoveries, commercial and contractual disputes, environmental claims, occupational health and safety claims etc. Any of these claims or actions could result in delays, increase costs or otherwise adversely impact Range’s operations, and adversely impact on financial performance and future financial prospects of the Group. + Mitigation Range and its legal advisers actively monitor and manage potential and actual claims, actions and disputes. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 30 + Annual Report 2018 + Remuneration Report (Audited) Remuneration policy The remuneration policy of Range has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the Group’s financial results. The Board of Range Resources Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Group, as well as create alignment of goals between directors, executives and shareholders. The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives of the Company is as follows: The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed and approved by the Board. Non-executive directors, executive directors and senior executives receive a base salary (which is based on factors such as length of service and experience), which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicles, as well as employer contributions to superannuation funds where applicable. Executive and non-executive directors can be employed by the Company on a consultancy basis on Board approval, with remuneration and terms stipulated in individual consultancy agreements. The Board exercises its discretion in determining remuneration performance of executives. Given the size and nature of the entity, the Board does not deem it to be realistic to measure performance against defined criteria. As such remuneration and performance have historically not been linked. All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Shares given to directors and executives are valued as the difference between the market price of those shares and the amount paid by the director or executive. Unlisted options are valued using the Black-Scholes methodology. The Board policy is to remunerate non-executive directors at market rates for comparable companies taking into consideration time, commitment and level of responsibility. As approved by shareholders on 30 November 2011, the aggregate non-executive remuneration per annum is currently A$350,000 (US$260,555). The Remuneration and Nomination Committee determines payments to the non-executive directors and reviews their remuneration annually. The Remuneration and Nomination Committee held three meetings during the year. Independent external advice is sought when required. Fees for non-executive directors are not linked to the performance of the Group. The directors are not required to hold any shares in the Company under the Constitution of the Company; however, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company. Options may be issued to directors and executives as part of remuneration. Options issued to directors historically were not based on performance criteria. However, the options issued to the current directors on 27 March 2015 and the Key Management Personnel on 1 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 31 + Annual Report 2018 Remuneration policy (continued) September 2015 and November 2016, principally vest upon satisfaction of set company performance criteria detailed in Note 30. Under the Company’s share trading policy, all employees and directors of the Company and its related companies are prohibited from trading in the Company’s shares or other securities if they are in possession of inside information. The Board believes that it has implemented suitable practices and procedures that are appropriate for an organisation of this size and maturity. Remuneration committee A Remuneration and Nomination Committee was established during the year ended 30 June 2015. An annual review of remuneration is generally undertaken, however no review was undertaken during the reporting period. The Remuneration and Nomination Committee held discussions following the period end and is intending to undertake a comprehensive review in early 2019. No remuneration consultants were used by the Group during the year. Company performance, shareholder wealth and directors and executive’s remuneration No relationship exists between shareholder wealth, director and executive remuneration and Company performance. Voting and comments made at the company’s 2017 Annual General Meeting The adoption of the Remuneration Report for the financial year ended 30 June 2017 was put to the shareholders of the Company at the AGM held on 30 November 2017. The remuneration resolution received a “first strike”, representing a ‘no’ vote from 91.43% of shareholders who exercised their right to vote. The Company did not receive any specific feedback at the AGM or throughout FY2018 on its remuneration practices. However, since the AGM, the Board has engaged with shareholders to understand their concerns that led to this voting outcome. The Company does not believe that the vote was directly related to remuneration practices. However, the Board has taken the opportunity to improve the composition of its remuneration and nomination committee by appointing an additional independent director. The remuneration and nomination committee will be undertaking a review of the existing executive and director compensation plans in 2019 and will implement changes as necessary. The Company may also consider undertaking an independent review and critique of its remuneration disclosures with the assistance of external consultants. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 32 + Annual Report 2018 Key Management Personnel Name Position Appointed/Resigned Mr Zhiwei Gu Non-Executive Chairman appointed 25 May 2016 Mr Yan Liu Ms Juan Wang Executive Director, Chief Executive Officer Non-Executive Director Mr Yu Wang Non-Executive Director Mr Lubing Liu Dr Yi Zeng Non-Executive Director Executive Director, Chief Operating Officer and Trinidad General Manager Non-Executive Director Mr Nick Beattie CFO & Company Secretary Mr Lijun Xiu Vice President of Operations and Production appointed 25 May 2016 appointed 30 November 2014 appointed 30 September 2015 resigned 26 September 2017 appointed 16 June 2016 resigned 1 March 2018 appointed 1 March 2018 appointed 16 June 2016 appointed 23 May 2014 (as CFO) and 30 March 2015 (as Company Secretary) appointed 29 September 2016 resigned 25 June 2018 Details of remuneration The remuneration for the Key Management Personnel of the Group during the year was as follows: Short Term Benefits 2018 Cash salary & fees Currency US$ Directors & Officers 250,000 Mr Gu (i) 166,685 Mr Y Liu Ms Wang (ii) 141,250 Mr L Liu (iii) Dr Zeng Mr Beattie Mr Xiu (iv) Mr Yu Wang (v) Total 88,688 25,000 181,477 31,747 - 884,847 One-off payment Termination benefits US$ US$ - - - - - - - - - - - - - - - - - - Post- employment benefits Super annuation / pensions US$ Share based payments Options Total US$ US$ - 16,669 - 4,920 - 18,148 - - (12,990) (32,009) (10,853) - - (27,373) (760) - 237,010 151,345 130,397 93,608 25,000 172,252 30,987 - 39,737 (83,985) 840,599 (i) Fees paid to Mr Gu comprised US$30,000 received in his capacity as a non-executive director, US$25,000 in his role as Chairman and US$195,000 for additional consulting work. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 33 + Annual Report 2018 Details of remuneration (continued) (ii)Fees paid to Ms Wang comprised US$28,750 received in her capacity as a non-executive director and US$112,500 received for additional consulting work. (iii) Fees paid to Mr L Liu comprised US$16,667 received in his capacity as a non-executive director, US$37,340 received for additional consulting work and salary of US$39,601 in his capacity as Chief Operating Officer. (iv) Fees paid to Mr Xiu comprised US$31,747 received in his capacity as a Vice President of Operations and Production. (v) Mr Yu Wang tendered his resignation as Non-Executive Director effective 26 September 2017. Short Term Benefits Post- employment benefits Super annuation / pensions US$ Share based payments Options Total US$ US$ One-off payment Termination benefits US$ US$ - - - - - - - 104,000 - 104,000 - - 38,750 - - - - - - 38,750 - 16,203 - - - - 17,112 - - 33,315 21,515 23,971 (62,942) 1,558 - - 23,041 7,096 - 14,239 271,515 202,205 (11,274) 106,558 64,660 25,000 211,269 227,096 - 1,097,029 2017 250,000 162,031 Cash salary & fees Currency US$ Directors & Officers Mr Gu (i) Mr Y Liu Mr Chen (v) 12,918 Ms Wang (ii) 105,000 Mr L Liu (iii) Dr Zeng Mr Beattie Mr Xiu (iv) Mr Y Wang Total 64,660 25,000 171,116 116,000 - 906,725 (i) Fees paid to Mr Gu comprised US$30,000 received in his capacity as a non-executive director, US$25,000 in his role as Chairman and US$195,000 for additional consulting work. (ii)Fees paid to Ms Wang comprised US$30,000 received in her capacity as a non-executive director and US$75,000 received for additional consulting work. (iii) Fees paid to Mr L Liu comprised US$25,000 received in his capacity as a non-executive director and US$39,660 received for additional consulting work. (iv) Fees paid to Mr Xiu comprised US$60,000 received in his capacity as a Vice President of Operations and Production and US$56,000 plus a one-off payment of US$104,000 received for additional consulting work. (v) Mr Chen tendered his resignation as Non-Executive Director on 24 November 2016. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 34 + Annual Report 2018 Equity instrument disclosures relating to Key Management Personnel Share-based payments (year ended 30 June 2018) No options were issued to key management personnel. The expense reversal is due to the change in the probability of meeting the vesting conditions prior to the options expiring as explained below: • Probability of meeting the 1,500 barrels of oil per day for a continuous 15-day period in Trinidad vesting condition is 100%; • Probability of meeting the 2,500 barrels of oil per day for a continuous 15-day period in Trinidad vesting condition is 0%; and • Probability of meeting the 4,000 barrels of oil per day for a continuous 15-day period in Trinidad vesting condition is 0%. Share-based payments (year ended 30 June 2017) The following options were issued to key management personnel: Name: Number of options: Grant date: Mr Lijun Xiu 8,000,000 29 September 2016 The options expire on 30 March 2020 with an exercise price of £0.01 per share. The vesting conditions of these options are as follows: • 25% became exercisable on 31 March 2017; • 25% will become exercisable upon the Company reaching production of 1,500 barrels of oil per day for a continuous 15-day period in Trinidad; • 25% will become exercisable upon the Company reaching production of 2,500 barrels of oil per day for a continuous 15-day period in Trinidad; • 25% will become exercisable upon the Company reaching production of 4,000 barrels of oil per day for a continuous 15-day period in Trinidad. The value per option at the grant date was 0.21 cents, determined using the Black Scholes option price model using the following key inputs: Volatility: 100% Exercise price £0.01 Risk free rate: 1.92% Share price on grant date £0.00368 USD/GBP exchange rate 0.8028 Share-based payments (year ended 30 June 2016) The following options were issued to key management personnel: Name: Number of options: Grant date: Mr Nick Beattie 25,000,000 1 September 2015 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 35 + Annual Report 2018 Equity instrument disclosures relating to Key Management Personnel (continued) Name: Number of options: Grant date: Mr Yan Liu 20,000,000 25 May 2016 Name: Number of options: Grant date: Mr Zhiwei Gu 22,500,000 25 May 2016 Mr Liu's and Mr Gu's options were granted on 25 May 2016 however they were issued on 13 December 2016 once shareholder approval was obtained. All options expire on 30 March 2020 with an exercise price of £0.01 per share. The vesting conditions of these options are as follows: • 25% became exercisable on 31 March 2017; • 25% will become exercisable upon the Company reaching production of 1,500 barrels of oil per day for a continuous 15-day period in Trinidad; • 25% will become exercisable upon the Company reaching production of 2,500 barrels of oil per day for a continuous 15-day period in Trinidad; • 25% will become exercisable upon the Company reaching production of 4,000 barrels of oil per day for a continuous 15-day period in Trinidad. Mr Nick Beattie options The value per option at the grant date was 0.56 cents, determined using the Black Scholes option price model using the following key inputs: Volatility: 100% Exercise price Risk free rate: 1.92% Share price on grant date £0.01 £0.0057 USD/GBP exchange rate 0.6509 Mr Zhiwei Gu and Mr Yan Liu options: The value per option at the grant date was 0.30 cents, determined using the Black Scholes option price model using the following key inputs: Volatility: 100% Exercise price Risk free rate: 1.92% Share price on grant date USD/GBP exchange rate 0.7468 £0.01 £0.0037 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 36 + Annual Report 2018 Equity instrument disclosures relating to Key Management Personnel (continued) Share-based payments (year ended 30 June 2015) On 27 March 2015, the following options were issued to key management personnel: Name Mr Yan Liu Mr David Chen Mr Zhiwei Gu Ms Juan Wang Number of options 30,000,000 30,000,000 7,500,000 7,500,000 All options expire on 30 March 2020 with an exercise price of £0.01 per share. The vesting conditions of these options are as follows: • 25% became exercisable one year from the issue date; • 25% will become exercisable upon the Company reaching production of 1,500 barrels of oil per day for a continuous 15-day period in Trinidad; • 25% will become exercisable upon the Company reaching production of 2,500 barrels of oil per day for a continuous 15-day period in Trinidad; • 25% will become exercisable upon the Company reaching production of 4,000 barrels of oil per day for a continuous 15-day period in Trinidad. The value per option at the grant date was 0.51 cents, determined using the Black Scholes option price model using the following key inputs: Volatility: 100% Grant date: Risk free rate: 1.92% Exercise price USD/GBP exchange rate 0. 7752 Share price on grant date 27/03/2015 £0.01 £0.0054 Fully paid share holdings The numbers of shares in the Company held during the financial year or at time of resignation by Key Management Personnel of the Company, including their personally related parties, are set out below. 2018 Mr Gu Mr Y Liu Ms Wang Mr Wang Mr L Liu Dr Zeng Mr Beattie Mr Xiu Total: Balance at the start of the year 2,083,333 6,333,333 2,083,333 - - - 2,916,667 8,000,000 21,416,666 Granted as Compensation Other Changes - - - - - - - - - - - - - - - - - - Balance at the end of the year 2,083,333 6,333,333 2,083,333 - - - 2,916,667 8,000,000 21,416,666 Balance held indirectly - - - - - - - - - Range Resources Ltd and Controlled Entities ABN 88 002 522 009 37 + Annual Report 2018 Equity instrument disclosures relating to Key Management Personnel (continued) Options held by Key Management Personnel The numbers of options in the company held during the financial year or at time of resignation by Key Management Personnel of the Company, including their personally related parties, are set out below: 2018 Mr Gu Mr Y Liu Ms Wang Mr Wang Mr L Liu Dr Zeng Mr Beattie Mr Xiu Total: Balance at the start of the year 30,000,000 50,000,000 7,500,000 - - - 25,000,000 8,000,000 120,500,000 Granted as Compensation Other Changes - - - - - - - - - - - - - - - - - - Balance at the end of the year 30,000,000 50,000,000 7,500,000 - - - 25,000,000 8,000,000 120,500,000 Vested and exercisable 7,500,000 12,500,000 1,875,000 - - - 6,250,000 - 28,125,000 Loans to Key Management Personnel There were no loans made to directors of Range and other Key Management Personnel of the Group, including their personally related parties during the 2017 or 2018 financial years. The consulting fees paid to Zhiwei Gu, Juan Wang and Lubing Liu were US$195,000, US$112,500 and US$25,740 respectively. The amount due to Lijun Xiu is US$42,000. Employment contracts of Directors and other Key Management Personnel On appointment, Executive Directors and Other Key Management Personnel enter into an employment contract with the Company (or another company within the Group). This contract sets out their duties, remuneration and other terms of employment. These contracts may be terminated by either the Company or the employee as detailed below. All non-executive directors are eligible to receive consulting fees for services provided to the Company over and above the services expected from a non-executive director. Mr Zhiwei Gu as Non-Executive Chairman Non-Executive Chairman contract Contract start date: Base Payment: Superannuation: Notice period: Termination benefits: Consulting services: 25 May 2016 US$55,000 per annum No superannuation entitlement 3 months Payment in lieu of notice at Company option for termination without cause From May 2016, Mr Gu provides additional executive and consulting services over and above services rendered to the Company at a rate of US$16,250 per month Range Resources Ltd and Controlled Entities ABN 88 002 522 009 38 + Annual Report 2018 Employment contracts of Directors and other Key Management Personnel (continued) Mr Yan Liu as Chief Executive Officer Chief Executive Officer contract Contract start date: Base Payment: Superannuation: Bonus: Notice period: Termination benefits: 25 May 2016 AU$215,000 per annum 10% of base salary Eligible to receive bonus at the discretion of the board 3 months Payment in lieu of notice at Company option for termination without cause Ms Juan Wang as Non-Executive Director Non-Executive Director contract Contract start date: Base Payment: Superannuation: Termination benefits: Consulting services: 19 January 2015 US$30,000 per annum up to and including March 2018, US$25,000 per annum thereafter No superannuation entitlement None From January 2017 up to and including March 2018, Ms Wang provided additional consulting services over and above services rendered to the Company as a Non-Executive Director at a rate of US$12,500 per month. Mr Lubing Liu as Non-Executive Director Non-Executive Director contract Contract start date: Base Payment: Superannuation: Termination benefits: Consulting services: 16 June 2016, resigned 1 March 2018 US$25,000 per annum No superannuation entitlement None Mr Liu may provide additional consulting services over and above services rendered to the Company as a Non-Executive Director from time to time as required at a rate of between US$600 and US$1,200 per day. Mr Lubing Liu as Chief Operating Officer, Trinidad General Manager and Executive Director Chief Operating Officer and Trinidad General Manger contract 1 March 2018 Contract start date: US$144,000 per annum Base Payment: 10% of base Superannuation: 3 months Notice period: 3 months’ salary Termination benefits: Range Resources Ltd and Controlled Entities ABN 88 002 522 009 39 + Annual Report 2018 Employment contracts of Directors and other Key Management Personnel (continued) Dr Yi Zeng as Non-Executive Director Non-Executive Director contract Contract start date: Base Payment: Superannuation: Termination benefits: 16 June 2016 US$25,000 per annum No superannuation entitlement None Mr Nick Beattie as Chief Financial Officer Chief Financial Officer contract Contract start date: Base Payment: Pension: Bonus: Notice period: Termination benefits: 23 May 2014 GB£135,000 per annum, reviewed annually 10% of base Eligible to receive bonus at the discretion of the board 3-6 months 6 months’ salary Mr Lijun Xiu as Vice President of Operations and Production Vice President of Operations and Production Contract start date: Base Payment: Notice period: Termination benefits: 29 September 2016, resigned 25 June 2018 US$144,000 per annum, reviewed annually 45 days None This is the end of the audited remuneration report. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 40 + Annual Report 2018 Proceedings on behalf of the company No person has applied for leave of Court to bring proceedings on behalf of the Company or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. Indemnifying officers or auditors In accordance with the constitution, except where prohibited by the Corporations Act 2001, every director, principal executive officer and secretary of the Company shall be indemnified out of the property of the Company against any liability incurred by him/her in his/her capacity as director, principal executive officer or secretary of the Company or any related corporation in respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings whether civil or criminal. During the financial year, the Company has paid premiums of US$35,106 to insure the Directors and Officers against certain liabilities arising out of the conduct of acting as an officer of the Company. Under the terms and conditions of the insurance contract, the nature of liabilities insured against and the premium paid cannot be disclosed. Non-audit services The total value of non-audit services provided by a related practice of BDO Audit (WA) Pty Ltd in respect to the Company’s tax compliance is US$17,010 (2017: US$17,828). The board of directors has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed by the Board to ensure they do not impact the impartiality and objectivity of the auditor; and • none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants Auditor’s Independence Declaration The auditor’s independence declaration, as required under Section 307C of the Corporations Act 2001, for the year ended 30 June 2018 has been received and can be found on the following page. This report is signed in accordance with a resolution of the Board of Directors. Zhiwei Gu: Chairman 28 September 2018 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 41 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF RANGE RESOURCES LIMITED As lead auditor of Range Resources Limited for the year ended 30 June 2018, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Range Resources Limited and the entities it controlled during the period. Jarrad Prue Director BDO Audit (WA) Pty Ltd Perth, 28 September 2018 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees + Annual Report 2018 + Consolidated Statement of Profit or Loss and other Comprehensive Income for the year ended 30 June 2018 The below consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Revenue from continuing operations Operating expenses Royalties Note 3 2018 (US$) 13,059,422 Consolidated 2017 (US$) 8,435,309 (10,769,092) (8,770,969) (4,605,811) (2,494,497) Depreciation, depletion and amortisation Cost of sales (4,950,666) (20,325,569) 4a (6,289,324) (17,554,790) Gross loss (7,266,147) (9,119,481) Other income and expenses from continuing operations Other income Finance costs General and administration expenses Exploration expenditure and land fees Impairment of non-current assets Loss before income tax expense from continuing operations 3 4b 4c 4d 15 421,897 (3,094,795) (4,102,712) (1,946,306) - 174,367 (3,806,226) (5,223,721) (1,152,854) (28,985,014) (15,988,033) (48,112,929) Income tax expense Loss after income tax from continuing operations Loss from discontinued operations, net of tax Loss for the year attributable to equity holders of Range Resources Limited 6 5 (1,542,204) (17,530,237) - (4,999,950) (53,112,879) (1,250,000) (17,530,237) (54,362,879) Other comprehensive income Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations Other comprehensive loss for year, net of tax Total comprehensive loss attributable to equity holders of Range Resources Limited 25c (1,423,892) 2,144,373 (1,423,892) 2,144,373 (18,954,129) (52,218,506) Loss per share from continuing operations attributable to the ordinary equity holders of the Company: Basic loss per share (cents per share) (0.68) (0.23) 8a Diluted loss per share (cents per share) 8b n/a n/a Loss per share attributable to the ordinary equity holders of the Company: Basic loss per share (cents per share) Diluted loss per share (cents per share) (0.23) n/a 8a 8b (0.70) n/a Range Resources Ltd and Controlled Entities ABN 88 002 522 009 43 + Annual Report 2018 + Consolidated Statement of Financial Position as at 30 June 2018 The below consolidated statement of financial position should be read in conjunction with the accompanying notes. Assets Current Assets Cash and cash equivalents Trade and other receivables Inventory Other current assets Total current assets Non-Current Assets Trade and other receivables Deferred tax asset Available for sale financial assets Goodwill Property, plant and equipment Exploration assets Producing assets Note Consolidated 2018 (US$) 2017 (US$) 9 10 11 11 10 6c 13 15 16 17 18 3,945,683 4,875,766 3,277,096 3,054,911 15,153,456 2,251,384 13,517,531 - 3,241,472 25,489,614 6,744,997 109,091,650 17,254,360 5,740,726 2,353,143 233,140 25,581,369 6,866,394 6,853,135 45,238 - 2,021,682 632,176 108,347,455 Total non-current assets 160,336,648 124,766,080 Total assets 175,490,104 150,347,449 Current liabilities Trade and other payables Current tax liabilities Borrowings Option liability Provisions Total current liabilities Non-current liabilities Trade and other payables Borrowings Deferred tax liabilities Employee service benefits Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Non-controlling interest Accumulated losses Total equity 19 20 20b 21 19 20 22 23 24 25 17 9,929,506 246,917 1,600,000 33,345 811,737 12,621,505 50,441,779 42,439,606 64,761,942 731,350 158,374,677 1,613,499 283,220 - 341,618 784,316 3,022,653 51,390,088 21,071,631 54,500,144 340,289 127,302,152 170,996,182 130,324,805 4,493,922 20,022,644 383,918,397 24,822,953 3,517,873 (407,765,301) 4,493,922 383,918,397 26,339,311 - (390,235,064) 20,022,644 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 44 + Annual Report 2018 + Consolidated Statement of Changes in Equity for the year ended 30 June 2018 The below consolidated statement of changes in equity should be read in conjunction with the accompanying notes. Contributed equity Accumulated losses Note Foreign currency translation reserve Share-based payment reserve Option premium reserve Non- controlling interests Total equity Balance at 1 July 2016 383,882,192 (335,872,185) 3,620,738 8,549,024 12,057,363 - 72,237,132 (US$) (US$) (US$) (US$) (US$) (US$) Other comprehensive income Loss attributable to members of the company Total comprehensive loss for the year - - - 2,144,373 (54,362,879) - - - (54,362,879) 2,144,373 - Transactions with owners in their capacity as owners: Issue of share capital 24 36,205 - - - - - - (32,187) Cost of share-based payments Balance at 30 June 2017 - - - - - - - - - - 2,144,373 (54,362,879) (52,218,506) 36,205 (32,187) 383,918,397 (390,235,064) 5,765,111 8,516,837 12,057,363 - 20,022,644 Balance at 1 July 2017 383,918,397 (390,235,064) 5,765,111 8,516,837 12,057,363 - 20,022,644 Other comprehensive income Loss attributable to members of the company Total comprehensive loss for the year - - - - (1,423,892) - (17,530,237) - - (17,530,237) (1,423,892) - Transactions with owners in their capacity as owners: Issue of share capital 24 Cost of share-based payments Non-controlling interests on acquisition of subsidiary Balance at 30 June 2018 - - 4 17 - - - - - - - - (92,466) - - - - - - - - - - - - (1,423,892) (17,530,237) (18,954,129) - (92,466) 3,517,873 3,517,873 383,918,397 (407,765,301) 4,341,219 8,424,371 12,057,363 3,517,873 4,493,922 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 45 + Annual Report 2018 + Consolidated Statement of Cash Flows for the year ended 30 June 2018 The below consolidated statement of cashflows should be read in conjunction with the accompanying notes Cash flows from operating activities Receipts from customers Payments to suppliers and employees Income taxes received Interest received Note Consolidated 2018 (US$) 2017 (US$) 6,580,150 (9,868,121) 1,954,339 115,477 8,531,655 (6,255,175) (958,253) 85,123 Payment for exploration expenditure (1,253,329) - Net cash inflow/(outflow) from operating activities 29 (2,471,484) 1,403,350 Cash flows from investing activities Cash acquired on business combination Payment for property, plant & equipment 15(a) 357,940 16 (254,088) - (4,363) Payment for asset acquisition 17(i) (2,560,000) - Proceeds from disposal of property, plant and equipment Transfer from/(to) restricted deposit Payments for available for sale assets Payments for loan to external parties Net cash inflow/(outflow) from investing activities 19,061 63,106 - - (4,047,630) (6,484,717) 8,000,000 (6,830) (5,153,759) 2,898,154 Cash flows from financing activities On-demand refundable payment to LandOcean Repayment of borrowings – convertible note interest Net cash inflow/(outflow) from financing activities 11 20 (2,800,000) (1,600,000) (4,400,000) - - - Net increase/(decrease) in cash and cash equivalents Net foreign exchange differences Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year 9 (13,356,201) 4,301,504 47,524 (48,396) 17,254,360 13,001,252 3,945,683 17,254,360 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 46 + Annual Report 2018 + Notes to Consolidated Financial Statements Note 1: Significant accounting policies These financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Range Resources Limited is a for-profit entity for the purpose of preparing the financial statements. The financial statements cover the Group consisting of Range Resources Limited and its controlled entities. Financial information for Range Resources Limited as an individual entity is disclosed in Note 32. Range Resources Limited is a listed public company, incorporated and domiciled in Australia. The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated. The financial report was authorised for issue by the Directors on 28 September 2018. Basis of preparation Reporting basis and conventions The financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied. Compliance with IFRS The financial statements of Range Resources Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The financial statements were approved by the Board of Directors on 28 September 2018. Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “Functional Currency”). The consolidated financial statements are presented in United States Dollars (USD), which is Range Resources Limited’s functional and presentation currency. Going concern This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business. For the year ended 30 June 2018 the Group recorded a loss of US$17,530,237 (2017: US$54,362,879) and had net cash outflows of US$13,356,201 (2017: cash inflows of Range Resources Ltd and Controlled Entities ABN 88 002 522 009 47 + Annual Report 2018 Note 1: Significant accounting policies (continued) US$4,301,504). At June 2018, the Group had a working capital surplus of US$2,531,951 (2017: surplus of US$22,558,716). The aility of the Group to continue as a going concern is dependent on securing additional funding through the issue of shares and/or debt to fund its operational activities and to finance the repayment of debt and payable obligation to LandOcean as this falls due. These conditions indicate a material uncertainty that may cast a significant doubt about the Group’s ability to continue as a going concern and, therefore, it may be unable to realise its assets and discharge its liabilities in the normal course of business. At the reporting date, Range had US$3,945,683 of unrestricted cash at bank and an on- demand cash receivable from LandOcean of US$2,800,000 as explained in Note 11. Subsequent to the year end, Range Resources Limited announced a subscription for new ordinary shares to raise US$1,300,000 million before expenses. Management believe there are sufficient funds to meet the Group’s working capital requirements as at the date of this report. The Company will continue to focus its capital allocation on assets which maximise production and enhance cash generation and returns to shareholders. Should the Company not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary should the Company not continue as a going concern. Adoption of new and revised accounting standards In the year ended 30 June 2018, the directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current annual reporting period. As a result of this review, the directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Company and, therefore, no material change is necessary to Group accounting policies. (a) Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Range Resources Limited (“Parent Entity” or “Company”) as at 30 June 2018 and the results of all subsidiaries for the year then ended. Range Resources Limited and its subsidiaries together are referred to as the “Group”. Subsidiaries are all those entities (including special purpose entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its investment with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Where controlled entities have entered or left the Group during the year, their operating results have been included/excluded from the date control was obtained or until the Range Resources Ltd and Controlled Entities ABN 88 002 522 009 48 + Annual Report 2018 Note 1: Significant accounting policies (continued) date control ceased. A list of controlled entities is contained in Note 14 to the financial statements. All controlled entities have a 30 June financial year-end. All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the Group. Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a shareholding of between 20-50% of the voting rights. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost. (b) Income tax The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date within each jurisdiction. Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is credited in profit or loss except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 49 + Annual Report 2018 Note 1: Significant accounting policies (continued) (c) Property, plant and equipment Owned assets Plant and equipment are measured on the historical cost basis less accumulated depreciation and impairment losses. The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. Oil and gas assets These properties represent the accumulation of all exploration, evaluation and development expenditure, pre-production development costs and ongoing costs of continuing the develop reserves for production incurred by or on behalf of the entity in relation to areas of interests. Where further development expenditure is incurred in respect of a property after the commencement of production, such expenditure is carried forward as part of the cost of that property only when expected future economic benefits are to be received, otherwise such expenditure is classified as part of the cost of production. Depreciation The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a straight-line basis over their useful lives to the Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciable asset are: Class of fixed Asset Plant & equipment Production equipment Motor vehicles, furniture & fixtures Leasehold improvements Depreciation Rate 11.25% - 33% 10 - 20% 25 - 33% 10 - 12.50% The residual values of the assets and their useful lives are reviewed and adjusted if appropriate at each reporting date. The carrying amount of plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the employment of the assets and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. The carrying amount of the asset is written down to its recoverable amount if its carrying amount is greater than its estimated recoverable amount. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 50 + Annual Report 2018 Note 1: Significant accounting policies (continued) Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to accumulated losses. (d) Exploration and evaluation expenditure and the recognition of assets Acquisition costs for exploration and evaluation projects are accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. The recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. The carrying values of expenditures carried forward are reviewed for impairment at each reporting date when the facts, events or changes in circumstances indicate that the carrying value may be impaired. Accumulated expenditures are written off to profit or loss to the extent to which they are considered to be impaired. The group applies AASB 6 Exploration and Evaluation of Mineral Resources which is equivalent to IFRS 6. The carrying value of exploration and evaluation expenditure is historical cost less impairment. Ongoing exploration costs incurred in respect of the Group’s Trinidadian and Indonesian interests are expensed as incurred. Initial acquisition costs to obtain the right to explore are capitalised. (e) Producing assets Upon the commencement of commercial production from each identifiable area of interest, the exploration and evaluation expenditure incurred up to that point is impairment tested and then reclassified to producing assets. When production commences, the accumulated costs for the relevant area of interest are amortised on a "units of production" method which is based on the ratio of actual production to remaining proved and probable reserves (1P) as estimated by independent petroleum engineers over the life of the area according to the rate of depletion of the economically recoverable reserves. Subsequent costs such as workovers, are included in the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. All other costs are charged to profit or loss during the financial period in which they are incurred. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 51 + Annual Report 2018 Note 1: Significant accounting policies (continued) The carrying amount of producing assets is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount of an asset is the greater of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows of an asset are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash flows that are largely independent from other assets or groups of assets, the recoverable amount is determined for the cash generating unit to which the asset belongs. For producing assets, the estimated future cash flows for the value-in-use calculation are based on estimates, the most significant of which are 2P hydrocarbon reserves, future production profiles, commodity prices, operating costs and any future development costs necessary to produce the reserves which the group is committed. Under a fair value less costs to sell calculation, future cash flows are based on estimates of 2P hydrocarbon reserves. Estimates of future commodity prices are based on the Group’s best estimate of future market prices with reference to external market analysts’ forecasts, current spot prices and forward curves. Future commodity prices are reviewed at least annually. The carrying amount of an asset is written down to its recoverable amount if its carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to accumulated losses. The Group records the present value of the estimated cost of legal and constructive obligations to restore operating locations in the period in which the obligation arises. The nature of restoration activities includes the removal of facilities, abandonment of wells and restoration of affected areas. A restoration provision is recognised and updated at different stages of the development and construction of a facility and then reviewed on an annual basis. When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related exploration and evaluation/development assets. Over time, the liability is increased for the change in the present value based on a post- tax discount rate appropriate to the risk inherent in the liability. The unwinding of the discount is recorded as an accretion charge within finance costs. The carrying amount capitalised in oil and gas properties is depreciated over the useful life of the related asset. Costs incurred that relate to an existing condition caused by past operation and do not have a future economic benefit are expensed. (f) Financial instruments The Group’s financial instruments include cash and cash equivalents, trade and other receivables and available-for-sale financial assets. Recognition Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition, these instruments are measured as set out below. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 52 + Annual Report 2018 Note 1: Significant accounting policies (continued) The Group classifies its financial assets in the following categories: loans and receivables and available-for-sale investments. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. Available-for-sale financial assets Available-for-sale financial assets include non-derivative financial assets designated in this category not included in any of the other categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to the available for sale investment revaluation reserve in equity. Investments are designated as available-for-sale if they do not have fixed maturities and fixed determinable payments and management intends to hold them for the medium to long term. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities held at cost less impairment, including recent arm’s length transactions, reference to similar instruments and option pricing models. Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in the available for sale investment revaluation reserve in equity. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in equity. Impairment of assets The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss) is removed from equity and included in profit or loss. Impairment losses recognised in the statement of profit or loss and other comprehensive income on equity instruments classified as available-for-sale are not reversed through profit or loss. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 53 + Annual Report 2018 Note 1: Significant accounting policies (continued) Recognition and de-recognition Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are de-recognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and reward of ownership. When the securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in profit or loss as gains and losses for investment securities. (g) Foreign currency transactions and balances Functional and presentation currency The functional currency of each entity within the Group is determined using the currency of the primary economic environment in which that entity operates. Transaction and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in profit or loss Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in profit or loss. (h) Provisions Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects the current market assessments of the time value of money and the risk specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 54 + Annual Report 2018 Note 1: Significant accounting policies (continued) (i) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position. (j) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Group will not be able to collect all amounts due, according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of impairment loss is recognised in profit or loss within other expenses. When a trade receivable, for which an impairment allowance had been recognised, becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss. (k) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. Revenue is recognised when the amount of revenue can be reliably measured, and it is probable that future economic benefits will flow to the Group. Revenue from the sale of oil and gas and related products is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership and the amounts can be measured reliably. In the case of oil, this usually occurs at the time of lifting. Interest revenue is recognised on a time proportion basis taking into account the interest rates applicable to the financial assets. (l) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as Range Resources Ltd and Controlled Entities ABN 88 002 522 009 55 + Annual Report 2018 Note 1: Significant accounting policies (continued) part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. (m) Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (n) Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement for disclosure purposes. The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price. The fair value of financial instruments that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash follows at the current market interest rate that is available to the Group for similar financial instruments. (o) Investments in associates Investments in associates are accounted for using the equity method of accounting in the consolidated financial statements. Under the equity method, the investment in the associate is carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate. The Group's share of the associate post-acquisition profits or losses is recognised in the statement of profit or loss and other comprehensive income. The cumulative post- acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses in the associate equals or exceeds its interest in the associate, including any unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 56 + Annual Report 2018 Note 1: Significant accounting policies (continued) The reporting dates of the associate and the Group are identical and the associate’s accounting policies conform to those used by the Group for like transactions and events in similar circumstances. (p) Prepayments for investments Prepayments for acquisitions of financial assets are recorded at the fair value of consideration to acquire the assets. On satisfaction of all terms of the acquisition contract have been satisfied the prepayment is transferred and accounted for as an investment. (q) Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition unless alternative terms are agreed. The Group’s most material balance is with LandOcean which has specific payment terms of 3 years. (r) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at reporting date. (s) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (t) Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares. (u) Segment reporting Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 57 + Annual Report 2018 Note 1: Significant accounting policies (continued) (v) Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which they are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. (w) Intangible assets (goodwill) Goodwill is measured at cost less any impairment write downs. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segments (note 28). (x) Share-based payments The fair value of options granted is recognised as an expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions. (y) Employee benefits Wages and salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Long service benefit The liability for long service benefit is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to Range Resources Ltd and Controlled Entities ABN 88 002 522 009 58 + Annual Report 2018 Note 1: Significant accounting policies (continued) expected future wage and salary levels, experience of employee departures and periods of service. (z) Leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits. Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability. Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the company will obtain ownership at the end of the lease term. Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease. (aa) Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current. (bb) Compound financial instruments Compound financial instruments issued by the Group comprise convertible notes that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed. The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 59 + Annual Report 2018 Note 1: Significant accounting policies (continued) Interest related to the financial liability is recognised in profit or loss. On conversion the financial liability is reclassified to equity and no gain or loss is recognised. Convertible notes that can be converted to share capital at the option of the holder and where the number of shares is variable, contains an embedded derivative liability. The embedded derivative liability is calculated (at fair value) first and the residual value is assigned to the debt host contract. The embedded derivative is subsequently measured at fair values and movements are reflected in the profit or loss. Certain convertible notes issued by the Group which include embedded derivatives (option to convert to variable number of shares in the Group) are recognised as financial liabilities at fair value through profit or loss. On initial recognition, the fair value of the convertible note will equate to the proceeds received and subsequently the liability is measured at fair value at each reporting period until settlement. The fair value movements are recognised on the profit or loss as finance costs. Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. (cc) Non-current assets classified as held for sale Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. They are measured at the lower of their carrying amount and fair value less costs to sell. For non- current assets to be classified as held for sale, they must be available for immediate sale in their present condition and their sale must be highly probable. An impairment loss is recognised for any initial or subsequent write down of the non- current assets to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of a non-current asset, but not in excess of any cumulative impairment loss previously recognised. Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognised. Non-current assets classified as held for sale are presented separately on the face of the consolidated statement of financial position, in current assets. The liabilities of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current liabilities. (dd) Discontinued operations A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which: • • • represents a separate major line of business or geographical area of operations is part of a single co-ordinated plan to dispose of a separate major line of business or geographical are of operations is a subsidiary acquired exclusively with a view to resale. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 60 + Annual Report 2018 Note 1: Significant accounting policies (continued) Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale. When an operation is classified as a discontinued operation, the comparative consolidated statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative year. (ee) Inventories Inventories include consumable supplies and maintenance spares and are valued at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes direct costs and an appropriate portion of fixed and variable production overheads where applicable. Inventories determined to be obsolete or damaged are written down to net realisable value, being the estimated selling price less selling costs. Note 2: Critical accounting estimates and judgements The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Areas involving a higher degree of judgement or complexity, or areas where estimations and assumptions are significant to the financial statements are disclosed here. Producing asset expenditure The classification of exploration and evaluation expenditure to producing assets is based on the time of first commercial production. Producing asset expenditure for each area of interest is carried forward as an asset provided certain conditions listed in Note 1(e) are met and depreciated on a unit of production basis on P1 reserves. P1 reserves have been determined by an independent expert. Producing assets are assessed for impairment when facts and circumstances suggest that the carrying amount of a production asset may exceed its recoverable amount. These timings, calculations and reviews require the use of assumptions and judgement. The related carrying amounts are disclosed in Note 18. Reserves and resources Estimates of reserves requires judgement to assess the size and quality of reservoirs and their anticipated recoveries. Estimates of reserves are used to calculate depreciation, depletion and amortisation charges. Impairment of goodwill and producing assets The Group tests whether goodwill or the producing assets has suffered any impairment in accordance with the accounting policies stated in notes 1(e) and 1(w). The recoverable amount of the cash-generating unit to which the assets belong is estimated based on the present value of future cash flows. The expected future cash flow estimation is always based on a number of factors, variables and assumptions, the most important of which are estimates of reserves, future production profiles, commodity prices and costs. In most cases, the present value of future cash flows is most sensitive to estimates of future oil price and discount rates. A Range Resources Ltd and Controlled Entities ABN 88 002 522 009 61 + Annual Report 2018 Note 2: Critical accounting estimates and judgements (continued) change in the modelled assumptions in isolation could materially change the recoverable amount. Refer to note 15 for details of these key assumptions. Deferred tax liability Upon acquisition of SOCA Petroleum Ltd in June 2011, in accordance with the requirement of AASB 112 Income Taxes, a deferred tax liability of US$46,979,878 was recognised in relation to the difference between the carrying amount for accounting purposes of deferred development assets and their actual cost base for tax purposes. The carrying value of this deferred tax liability is US$28,429,185 at 30 June 2018. In the event that the manner by which the carrying value of these assets is recovered differs from that which is assumed for the purpose of this estimation, the associated tax charges may be significantly less than this amount. Recoverability of deferred tax assets Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Management considers that it is probable that future taxable profits will be available to utilise those temporary differences. Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future profits. Fair value of assets acquired and liabilities assumed in business combination Identifiable assets acquired and liabilities assumed in business combination are measured at their fair values at the acquisition date. Share based payments transactions The Group measures the cost of equity-settled share-based payment transactions with employees by reference to the fair value of the equity instruments at the grant date. The fair value is determined using a Black-Scholes model. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and derivative liability. Contingent liabilities The Directors are of the opinion that no provision is required to be raised in respect to any of the matters disclosed in Note 27 as the likely outcome of any outflow is considered to be remote. Recoverability of capitalised exploration and evaluation expenditure The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. To the extent that capitalised exploration Range Resources Ltd and Controlled Entities ABN 88 002 522 009 62 + Annual Report 2018 Note 2: Critical accounting estimates and judgements (continued) and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which this determination is made. Note 3: Revenue From continuing operations Revenue from sale of oil Note Consolidated 2018 (US$) 2017 (US$) 12,629,996 8,435,309 Revenue from third party services 429,426 - Total revenue from continuing operations 13,059,422 8,435,309 Other income Interest income Other income Total other income Note 4: Expenses 240,390 181,507 421,897 78,021 96,346 174,367 Note Consolidated 2018 (US$) 2017 (US$) Loss before income tax includes the following specific expenses: a: Cost of sales Costs of production Royalties Staff costs Oil and gas properties depreciation, depletion and amortisation 6,688,758 4,605,811 4,080,334 4,950,666 6,613,133 2,494,497 2,157,836 6,289,324 Total cost of sales 20,325,569 17,554,790 b: Finance costs Fair value movement of derivative liability Fair value movement of option liability Foreign exchange loss Interest expense Interest on convertible note Other finance income Total finance costs c: General and administration expenses Directors’ and officers’ fees and benefits Share based payments – employee, director and consultant options Other expenses Total general and administration expenses (2,308,556) (308,273) 193,109 3,209,959 2,308,556 - 3,094,795 (786,021) (494,096) 1,362,426 2,119,996 1,871,318 (267,397) 3,806,226 20(b) - 840,599 1,097,029 (92,466) (32,187) 3,354,579 4,102,712 4,158,879 5,223,721 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 63 + Annual Report 2018 Note 4: Expenses (continued) d: Exploration expenditure Indonesia (i) Trinidad (ii) Other Total exploration expenditure 1,253,329 670,856 22,121 1,946,306 - 822,383 330,471 1,152,854 (i) Amounts expensed in the year in Indonesia relate to exploration activities in the Perlak field for which the company policy is to expense. (ii) Amounts expensed in the year in Trinidad relate to land fees in relation to St Mary’s for which the company policy is to expense. Note 5: Discontinued operations During 2017 the Group fully wrote down the asset held-for-sale which relates to 45% interest in the unlisted company Strait Oil & Gas Limited ("Strait") due to uncertainty over its recoverability. a: Results of discontinued operations Revenue Cost of sales Asset write off Other expenses Results from operating activities Income tax (expense)/benefit Results from operating activities, after tax Loss on sale of subsidiary asset Loss from discontinued operations Note 6: Income Tax Expense Note Consolidated 2018 (US$) 2017 (US$) - - - - - - - - - - - (1,250,000) - (1,250,000) - (1,250,000) - (1,250,000) a: Income tax expense Current tax Deferred tax Adjustments for current tax of prior periods Note Consolidated 2018 (US$) 2017 (US$) - 1,419,725 122,478 9 1,542,204 - 4,974,750 25,200 4,999,950 Income tax expense/(benefit) is attributable to: Loss from continuing operations Loss from discontinued operations Aggregate income tax expense b: The prime facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows: 4,999,950 - 1,542,204 - 4,999,950 1,542,204 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 64 + Annual Report 2018 Loss from continuing operations before income tax Loss from discontinuing operations before income tax Prime facie tax payable on loss from ordinary activities before income tax at 30% (2017: 30%) Group Add tax effect of: Other taxes Expenses not deductible for tax Tax losses not brought to account Capital expenses deductible for tax purposes Deferred tax assets not brought to account Differences in tax rates Unrecognised deferred tax asset Capital losses Revenue losses Other Offset of deferred tax liabilites Net Deferred Tax Assets not brought to account c: Recognised deferred tax assets Temporary differences Recognised deferred tax liabilities Accelerated depreciation DTL arising on business combination Net deferred tax liabilities Note Consolidated 2018 (US$) 2017 (US$) (15,988,033) (48,112,929) - (1,250,000) (15,988,033) (49,362,929) (4,474,410) (14,433,879) (4,796,410) (14,433,879) 88,626 4,883,415 11,316,449 25,200 23,850,271 11,471,474 (5,961,448) (8,092,768) 331,010 4,179,397 (4,319,439) 1,542,204 (11,999,745) 4,999,950 443,654 10,595,377 2,866,987 (5,680,826) 443,654 10,470,664 1,400,991 (3,147,098) 8,225,192 9,168,211 13,517,531 13,517,531 6,853,135 6,853,135 (36,332,757) (28,429,185) (64,761,942) (26,167,218) (28,332,926) (54,500,144) Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set out in Note 1(b) occur. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 65 + Annual Report 2018 Note 7: Auditor’s remuneration Note Consolidated 2018 (US$) 2017 (US$) Remuneration of the auditor of the Parent Entity for: Auditing or reviewing the financial report by BDO Audit (WA) Pty Ltd Non-audit services provided by a related entity of BDO Audit (WA) Pty Ltd in respect to Parent Entity’s tax compliance Professional services provided by BDO UK LLP in respect to AIM admission Total remuneration for the Parent Entity Remuneration of the auditors of the subsidiaries Auditing or reviewing the financial report by BDO UK Auditing or reviewing the financial report by BDO Barbados Auditing or reviewing the financial report by BDO Trinidad Auditing or reviewing the financial report by BDO Indonesia Total remuneration for the subsidiaries Note 8: Loss by share 56,016 70,000 17,010 17,828 160,591 233,617 2,016 14,175 30,801 19,300 66,292 - 87,828 5,327 10,331 29,251 - 44,909 Note Consolidated 2018 (US$) 2017 (US$) (0.23) (0.23) a: Basic loss per share Loss per share from continuing operations attributable to the ordinary equity holders of the company Loss per share attributable to the ordinary equity holders of the company b: Diluted loss per share Loss per share from continuing operations attributable to the ordinary equity holders of the company Loss per share attributable to the ordinary equity holders of the company c: Reconciliation of loss used in calculating earnings per share Basic/ Diluted loss per share Loss from continuing operations attributable to the ordinary equity holders of the company Loss attributable to the ordinary equity holders of the company d: Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic EPS n/a n/a (17,530,237) (17,530,237) 7,595,830,782 (0.68) (0.70) n/a n/a (53,112,879) (54,362,879) 7,595,830,782 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 66 + Annual Report 2018 Note 9: Cash and cash equivalents Cash at bank and on hand Risk exposure Note Consolidated 2018 (US$) 3,945,683 2017 (US$) 17,254,360 Information about the Group’s exposure to credit risk, foreign exchange risk and price risk is provided in Note 33. Note 10: Trade and other receivables Current Trade receivables (i) Taxes receivable Total trade and other receivables Note Consolidated 2018 (US$) 2017 (US$) 1,197,336 3,678,430 4,875,766 658,338 5,082,388 5,740,726 (i) Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. Trade receivables are neither past due nor impaired. Fair value approximates the carrying value of trade and other receivables at 30 June 2018 and 30 June 2017. Non-current Other receivables (i) Total trade and other receivables Note Consolidated 2018 (US$) 2017 (US$) 2,251,384 2,251,384 6,886,394 6,886,394 (i) Other receivables are comprised of receivables from LandOcean Energy Services Co. Ltd (US$1,220,713) and Sincep Oilog Equipment Co. Ltd (US$44,150) which are both part of LandOcean group of companies. The total interest due is US$986,521. Fair value approximates the carrying value of trade and other receivables at 30 June 2018 and 30 June 2017. Risk exposure Information about the Group’s exposure to credit risk, foreign exchange risk and price risk is provided in Note 33. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 67 + Annual Report 2018 Note 11: Other current assets Current Prepayments Inventory – finished goods Other assets (i) Total other current assets Note Consolidated 2018 (US$) 2017 (US$) 242,142 3,277,096 2,812,769 6,332,007 208,946 2,353,143 24,194 2,586,283 (i) Other assets include a refundable payment of $2,800,000 made to LandOcean Petroleum Corp. Ltd on 22 December 2017 in respect of RRDSL acquisition. The amount is receivable on-demand, unsecured and accrues 6% interest. Note 12: Assets held for sale During 2017 the Group fully wrote down the asset held-for-sale which relates to 45% interest in the unlisted company Strait Oil & Gas Limited ("Strait") due to uncertainty over its recoverability. Note Consolidated 2018 (US$) 2017 (US$) Movements in assets classified as held for sale are as follows: Opening net book amount Transfer from investment in associate Sold in period Impairment loss relating to discontinued operations Closing net book amount - - - - - 1,250,000 - - (1,250,000) - Note 13: Financial assets available for sale Interest in other corporations Note Consolidated 2018 (US$) - 2017 (US$) 45,238 Total available-for-sale financial assets - 45,238 Movement in financial assets available-for-sale Opening balance Impairment recognised in profit or loss Closing Balance 45,238 (45,238) - 45,238 - 45,238 Available-for-sale financial assets comprise investments in the ordinary share capital of various entities. There are no fixed returns or fixed maturity date attached to these investments. Risk exposure Information about the Group’s exposure to credit risk, foreign exchange risk and price risk is provided in Note 33. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 68 + Annual Report 2018 Note 14: Controlled Entities The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with accounting policy described in Note 1(a). Controlled Entities Consolidated Country of Incorporation Percentage Owned (%) 30 June 2018 30 June 2017 Subsidiaries of Range Resources Limited: Range Resources (Barbados) Limited SOCA Petroleum Limited Barbados Barbados Trinidad Range Resources Drilling Services Limited West Indies Exploration Company Limited Trinidad Range Resources Trinidad Limited Range Resources West Coast Limited Range Resources (Barbados) GY Limited Range Resources GY Shallow Limited Trinidad Trinidad Barbados Trinidad 100 100 100 100 100 100 100 100 Range Resources GY Deep Limited 100 Range Resources Upstream Services Limited United Kingdom 100 Trinidad Range Resources HK Limited PT Hengtai Weiye Oil and Gas PT Jasmine Oil and Gas Services (ii) PT Lubuk Kawai Raya (i) PT Aceh Timur Kawai Energi (i) Hong Kong Indonesia Indonesia Indonesia Indonesia 100 60 60 46.8 42.1 100 100 - 100 100 100 100 100 100 100 100 - - - - (i) Indirect control of these companies was obtained with the acquisition of 60% of share capital in PT Hengtai Weiye Oil and Gas. (ii) Newly established entity. Note 15a: Business Combinations On 30th November 2017, Range acquired RRDSL from LandOcean Petroleum Corp. Ltd. for a consideration of US$5,500,000. Details of the purchase consideration, the net assets acquired and goodwill are below. Purchase consideration comprises: Cash payable Total consideration US$ 5,500,000 5,500,000 The group has reported provisional amounts for the assets and liabilities acquired as follows: Net identifiable assets acquired 2,258,528 Net assets acquired: Plant and equipment Deferred tax asset Cash and cash equivalents 24,739,434 2,544,203 357,940 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 69 + Annual Report 2018 Trade and other receivables Inventory Trade and other payables Deferred tax liability Borrowings Goodwill 4,013,278 1,470,349 (1,745,851) (5,289,460) (23,831,365) 3,241,472 (a) Goodwill recognition and allocation On 30th November 2017, Range acqured RRDSL from LandOcean Petroleum Corp. Ltd. for a consideration of US$5,500,000 which is payable on 30 November 2020. Goodwill of US$3,241,472 represents the costs savings achieved within the Group now that RRDSL is part of Range group. (b) Revenue and loss contribution Revenue and net loss before tax of RRDSL included in the consolidated statement of profit or loss and other comprehensive income from the acquisition date to 30 June 2018 were US$429,426 and US$(3,015,699). If the acquisition had occurred on 1 July 2017, revenue and net profit from RRDSL would have been US$529,002 and US$268,188. (c) Purchase consideration – cash outflow Outflow of cash to acquire subsidiary net of cash acquired US$ Cash consideration Less cash acquired Net inflow of cash – investing activities - 357,940 357,940 Acquisition related costs Acquisition related costs of $736,881 are included in general and administration expenses in profit or loss and in operating cash flows in the statement of cash flows. (d) Accounting policy The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of subsidiary comprises the: (i) (ii) fair values of the assets transferred liabilities incurred to the former owners of the acquired business (iii) equity interests issued by the group fair value of any asset or liability resulting from contingent consideration (iv) arrangement, and (v) fair value of any pre-existing equity interest in the subsidiary Range Resources Ltd and Controlled Entities ABN 88 002 522 009 70 + Annual Report 2018 Note 15a: Business Combinations (continued) Identifiable assets acquired and liabilities and contingent liabilities assumed in business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred. The excess of the (i) (ii) consideration transferred, amount of any non-controlling interest in the acquired entity, and acquisition-date fair value of any previous equity interest in the acquired entity (iii) over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised directly in profit or loss as bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which similar borrowing could be obtained from an independent financier under comparable terms and conditions. Note 15b: Intangible Assets Cost Impairment write down Net book amount Year ended 30 June 2018 Opening net book amount Additions-acquisition Impairment charge Closing net book amount Impairment tests Note Consolidated 2018 (US$) 2017 (US$) 3,241,472 28,985,014 - 3,241,472 (28,985,014) - 15(a) - 3,241,472 - 3,241,472 28,985,014 - (28,985,014) - During the year ended 30 June 2018, the Group did not record an impairment with respect to goodwill. Goodwill has been allocated for impairment testing purposes to one cash-generating unit (CGU), identified according to operating segments, being Trinidad – oil and gas production. The goodwill represents the costs savings achieved within the group as a result of the RRDSL acquisition. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 71 + Annual Report 2018 Note 15b: Intangible Assets (continued) Estimates of the recoverable amount is based on an asset’s fair value less costs to sell using a discounted cash flow method and is most sensitive to the following key assumptions: • Obtaining all required approvals and permissions to undertake waterflood development; • Obtaining lease extensions until 2031; • P1 and P2 Recoverable reserves; • Commodity price of between US$60 and US$72 per barrel dependent on the year; • Operating costs at 10%-26% of revenue, depending on oil price and production at that time; • Post-tax discount rate of 10.0%. Economical recoverable reserves represent management’s expectations at the time of completing the impairment testing and based on the reserves statements and exploration and evaluation work undertaken by appropriately qualified persons. A summary of the Company’s Trinidad reserves and resources are published on the Group’s website. The commodity price for oil was based on mean WTI forecast oil price data from a variety of different analysts and other sources. Estimates (calendar years) are US$61/bbl in 2018, US$66/bbl in 2019, US$63/bbl in 2020, US$65/bbl in 2021, US$64/bbl in 2022, US$68/bbl in 2024, US$67/bbl in 2025 and then escalating at 2% per annum for the remainder of the project. Operating cost assumptions were based on FY19 budgets, actual costs incurred in FY18 and estimates of additional operating costs for waterflood activities received from Range Resources Drilling Services Limited. An adverse 20% change to oil prices, production, operating costs and the discount rate would not result in an impairment. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 72 + Annual Report 2018 Note 16: Property, Plant & Equipment Consolidated Production equipment and access roads Gathering station and field office Leasehold improvement Motor vehicle, furniture, fixtures & fittings Total US$ US$ US$ US$ US$ - - (28,211) 1,770,165 Year ended 30 June 2017 Opening net book amount Foreign currency movement Additions Disposals Depreciation charge Closing net book amount At 30 June 2017 Cost Accumulated depreciation Net book amount 1,607,570 1,607,570 6,288,571 (134,384) (4,681,001) 1,607,570 2,381 Year ended 30 June 2018 Opening net book amount Foreign currency movement Acquisitions from business combination Additions Depreciation charge Closing net book amount At 30 June 2018 Cost 23,742,231 214,331 (1,475,122) 24,091,391 30,265,925 98,119 214,300 246,644 2,329,228 (2,813) (4,421) (1,523) (36,968) - - - - 4,363 (3,916) 4,363 (3,916) (7,861) (25,022) (103,758) (271,025) 87,445 184,857 141,810 2,021,682 502,697 529,599 1,134,146 8,455,013 (415,252) (344,742) (992,336) (6,433,331) 87,445 184,857 141,810 2,021,682 87,445 184,857 141,810 2,021,682 127 404 210 3,122 - - - 997,203 24,739,434 14,484 228,082 456,897 (11,571) (18,255) (226,573) (1,731,521) 76,001 181,490 1,140,732 25,489,614 496,647 539,886 2,337,172 33,639,630 Accumulated depreciation (6,174,534) (420,646) (358,396) (1,196,440) (8,150,016) Net book amount 24,091,391 76,001 181,490 1,140,732 25,489,614 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 73 + Annual Report 2018 Note 17: Exploration assets Opening balance (ii) Acquisition (i) Foreign exchange Closing net book amount (i) Asset acquisition Note Consolidated 2018 (US$) 632,176 6,077,873 34,948 6,744,997 2017 (US$) 645,801 - (13,625) 632,176 On 30th October 2017, Range Resources Limited acquired through Range Resources HK Limited, 60% of the shares of PT Hengtai Weiye Oil and Gas ("Hengtai"), resulting in an indirect interest of 42% (a 23% indirect equity interest and further 19% indirect economic interest) in the Perlak field, Indonesia. Control has been obtained through the shareholder agreements in place at each entity level. Details of the fair value of the assets acquired are as follows: Purchase consideration comprises: Cash Total cash paid Total consideration Net assets acquired: Exploration and evaluation assets Less: non-controlling interests Total Put option agreement US$ 2,560,000 2,560,000 2,560,000 US$ 6,077,873 (3,517,873) 2,560,000 The vendor has agreed to provide Range with a put option, whereby Range has the option to enforce a buyback of its full 60% interest in Hengtai should agreed milestones not be achieved, therefore providing protection to Range's investment. These milestones, amongst others, include achieving minimum production of 800 bopd from Perlak field over a continuous 90-day period, as well as proving up independently audited 1P reserves of at least 10 mmbbl within a three-year period. On acquisition, a cash consideration of US$2,560,000 was paid. No value has been recognised for this option as there is no evidence that the milestones will not be achieved. Asset acquisition accounting policy The transaction is not deemed a business combination as the assets acquired did not meet the definition of a business. When an asset acquisition does not constitute a business combination, the assets and liabilities are assigned a carrying amount based on their relative fair values in an asset purchase transaction and no deferred tax will arise in relation to the acquired assets and assumed liabilities as the initial recognition exemption for deferred tax under AASB 112 applies. No goodwill arose on the acquisition and transaction costs of the acquisition will be included in the capitalised cost of the asset. The Range Resources Ltd and Controlled Entities ABN 88 002 522 009 74 + Annual Report 2018 Note 17: Exploration assets (continued) non-controlling interest is recognised at fair value. All the other expenses in relation to Indonesia are expensed in exploration costs in the Income Statement. (ii) Trinidad At 30 June 2018, US$667,124 (30 June 2017: US$632,176) capitalised exploration and evaluation expenditure relates to the interests of the Group in the Guayaguayare and St Mary’s Blocks in Trinidad. Note 18: Producing assets Cost Accumulated amortisation Net book value Note Consolidated 2018 (US$) 152,711,418 (43,619,768) 109,091,650 2017 (US$) 150,555,891 (42,208,436) 108,347,455 Opening net book amount 108,347,455 95,077,882 Foreign currency movement Additions Amortisation charge Closing net book amount 88,034 3,875,306 (3,219,145) 109,091,650 (761,346) 20,049,219 (6,018,300) 108,347,455 Refer to Note 15 for the assessment of the recoverable amount of the producing assets. Note 19: Trade and other payables a: Current Trade payables Sundry payables and accrued expenses Total b: Non-Current Interest bearing trade payables Accrued expenses Other payables – interest bearing Other payables – non-interest bearing Total Risk exposure Note Consolidated 2018 (US$) 2017 (US$) 1,416,480 8,513,026 9,929,506 41,359,805 5,796,050 3,242,977 42,947 50,441,779 381,237 1,232,262 1,613,499 40,851,038 10,539,050 - - 51,390,088 Trade payables are non-interest bearing. Interest bearing other payables are amounts due to LandOcean and are not payable until April 2020. Interest charged at 6%. Other interest-bearing payables relate to the consideration due to LandOcean Petroleum Corp Range Resources Ltd and Controlled Entities ABN 88 002 522 009 75 + Annual Report 2018 Note 17: Exploration assets (continued) Ltd for RRDSL acquisition, interest bearing at 6% on net balance outstanding which is due to be paid in November 2020. LandOcean payables are unsecured. Information about the Group’s exposure to credit risk, foreign exchange risk and price risk is provided in Note 33. Note 20: Borrowings Current borrowings Interest on convertible note Option liability Total current borrowings Non-current borrowings Borrowings at amortised cost Convertible note Total non-current borrowings a: Borrowings Principal Interest due on outstanding balance Closing net book amount Note 20c 20b 20a 20c Note Consolidated 2018 (US$) 2017 (US$) 1,600,000 33,345 1,633,345 - 341,618 341,618 24,481,224 17,958,382 42,439,606 - 21,071,631 21,071,631 Consolidated 2018 (US$) 2017 (US$) 15,640,024 8,841,200 24,481,224 - - - These are unsecured payables to EPT, Unionpetro, GPN and LO Petroleum, which all belong to the LandOcean group of companies. Interest is charged at 6% on net balance outstanding, with the amounts being payable within three years. Note Consolidated 2018 (US$) 2017 (US$) b: Option liability Option liability at fair value through profit or loss Closing net book amount During 2018, no options were exercised (2017: 0). 33,345 33,345 341,618 341,618 Total fair value movement recognised in the Statement of Profit and Loss was a gain of US$308,273 (2017: US$494,096). Range Resources Ltd and Controlled Entities ABN 88 002 522 009 76 + Annual Report 2018 Note 20: Borrowings (continued) c: Convertible note Convertible note liability element Convertible note derivative element Interest due on outstanding balance – non-current Interest due on outstanding balance- current Note Consolidated 2018 (US$) 2017 (US$) 16,507,750 384,007 16,507,750 2,692,563 1,066,625 271,318 1,600,000 1,600,000 Closing net book amount 19,558,382 21,071,631 In 2017, Range signed an agreement with LandOcean Energy Services Co. Limited. for the issuance of a US$20,000,000 convertible note. The terms of the convertible note are as follows: Issuer Noteholder Amount Tenor Repayment Interest Security Range Resources Limited LandOcean Energy Services Co. Limited US$20,000,000 Three years, maturity date 28 November 2019 Bullet at maturity date 8% per annum, payable annually in arrears (i) None Conversion price 0.88p per share Lender Conversion Right At any time, in a minimum amount of US$10,000,000 (i) The next interest payment of US$1,600,000 is due on 28 November 2018 and annually thereafter. The proceeds from this convertible note were utilised solely to replace a portion of the outstanding payable balance due to LandOcean under the terms of the Integrated Master Services Agreement ("IMSA"). Note 21: Provision for rehabilitation The Group records the present value of the estimated cost of legal and constructive obligations to restore operating locations in the period in which the obligation arises. The nature of restoration activities includes removal of facilities, abandonment of wells and restoration of affected areas. Provision for rehabilitation Note Consolidated 2018 (US$) 2017 (US$) 811,737 784,316 Movement in the provision for rehabilitation during the financial year are set out below: Carrying amount at the start of the year Additional provision recognised 784,316 27,420 811,737 740,268 44,048 784,316 Carrying amount at the end of the year Range Resources Ltd and Controlled Entities ABN 88 002 522 009 77 + Annual Report 2018 Note 22: Deferred taxes Accrued interest Total Deferred tax asset US$ US$ Movements: Year ended 30 June 2018 Opening balance Charged/(credited) - to profit or loss Acquisition of subsidiary Closing net book amount 6,853,135 4,120,193 2,544,203 13,517,531 6,853,135 4,120,193 2,544,203 13,517,531 Fair value uplift on business combination Accelerated depreciation Total Deferred tax liability US$ US$ US$ Movements: Year ended 30 June 2017 Opening balance Foreign currency movement Charged/(credited) - to profit or loss 30,046,205 - (1,713,279) 17,515,407 (1,007,041) 9,658,852 26,167,218 47,561,612 (1,007,041) 4,872,363 54,500,144 Closing net book amount 28,332,926 Movements: Year ended 30 June 2018 Opening balance Foreign currency movement Charged/(credited) - to profit or loss Acquisition of subsidiary Closing net book amount 28,332,926 - 96,259 - 28,429,185 26,167,218 (567,580) 5,443,659 5,289,460 36,332,757 54,500,144 (567,580) 5,539,918 5,289,460 64,761,942 As a result of business combination, at the date of acquisition a deferred tax liability has been recognised in relation to the difference between the carrying amount of the deferred exploration and development costs for accounting purposes and the cost base of the asset for tax purposes in accordance with the requirements of Australian Accounting Standard AASB 112 Income Taxes. The Group does not have a tax payable in relation to the deferred tax liability at 30 June 2018 and it is anticipated that the deferred taxation liability will be reduced in the future as the deferred exploration and development costs are amortised in future periods. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 78 + Annual Report 2018 Note 23: Other non-current liabilities Employee service benefits Total Risk exposure Note Consolidated 2018 (US$) 2017 (US$) 731,350 731,350 340,289 340,289 Information about the Group’s exposure to credit risk, foreign exchange risk and price risk is provided in Note 33. Note 24: Contributed equity 7,595,830,782 (2017: 7,595,830,782) fully paid ordinary shares Share issue costs Total contributed equity Note Consolidated 2018 (US$) 2017 (US$) 404,910,284 404,910,294 (20,991,887) 383,918,397 (20,991,897) 383,918,397 2018 No. 2018 (US$) 2017 No. 2017 (US$) Consolidated a: Fully paid ordinary shares At the beginning of reporting period 7,595,830,782 404,910,284 7,589,790,100 404,874,079 Shares issued during year Total contributed equity - 7,595,830,782 404,910,284 - 6,040,682 7,595,830,782 404,910,284 36,205 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting of the Company, in person or by proxy, is entitled to one vote and upon a poll each share is entitled to one vote. b: Options At the beginning of reporting period Options issued during year (refer Notes 20 and 30) Options expired Options exercised during year Total options Consolidated 2018 No. 2017 No. 808,844,977 - (27,000,000) - 781,844,977 903,055,747 8,000,000 (102,210,771) - 808,844,977 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 79 + Annual Report 2018 Note 24: Contributed equity (continued) At 30 June 2018, the unissued ordinary shares under option are as follows: Date of expiry 14 July 2018 14 July 2018 31 August 2018 3 September 2019 3 September 2019 30 March 2020 Total number under option: Exercise price Number under option £0.01 £0.02 £0.01 £0.01 £0.02 £0.01 161,472,247 118,729,593 14,000,000 194,585,862 172,557,275 120,500,000 781,844,977 The holders of these options do not have any rights under the options to participate in any share issues of the company. During the year ended 30 June 2018, no ordinary shares of Range were issued on the exercise of options (2017: nil). Note 25: Reserves a: Share-based payment reserve Balance 1 July 2017 Share based payment expenses (Note 30) Expired options reclassified to retained earnings Balance 30 June 2018 Note Consolidated 2018 (US$) 2017 (US$) 8,516,837 (92,466) 8,549,023 (32,186) - - 8,424,371 8,516,837 The share based payment reserve records items recognised as expenses on the fair valuation of shares and options issued as remuneration to employees, directors and consultants. b: Option premium reserve Balance 1 July 2017 Fair value movement of exercised options that were originally classified as a derivative liability Balance 30 June 2018 Note Consolidated 2018 (US$) 2017 (US$) 12,057,363 12,057,363 - - 12,057,363 12,057,363 The option premium reserve is used to recognise the grant date fair value of options. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 80 + Annual Report 2018 Note 25: Reserves (continued) c: Foreign currency translation reserve Balance 1 July 2017 Currency translation differences arising during the year Balance 30 June 2018 Note Consolidated 2018 (US$) 2017 (US$) 5,765,111 3,620,738 (1,423,892) 2,144,373 4,341,219 5,765,111 The foreign currency translation reserve is used to record exchange differences arising from the translation balances of foreign subsidiaries. Total reserves at 30 June 2018 24,822,953 26,339,311 Note 26: Commitments Expenditure and Capital commitments Not later than 1 year Total Note Consolidated 2018 (US$) 2017 (US$) - - 5,509,200 5,509,200 Note 27: Contingent liabilities and contingent assets Geeta Maharaj Range received an invoice from Geeta Maharaj, a Trinidad based attorney seeking payment for legal services in the amount of approximately US$1.9 million. The invoice purports to relate to legal work undertaken during mid-2014 including the preparation of inter-company loan agreements. Range strongly refutes the amount of this purported invoice and considers it to be vastly excessive and therefore not payable. A claim has been filed by Ms Maharaj seeking the sum of TT$12,019,573 (approximately US$1.9 million) plus interest and costs. Range filed a notice of application to strike out this claim on 14 July 2017. An initial hearing on this application was held on 29 September 2017 at which the parties were ordered to file and exchange written submissions by 20 October 2017 with replies, if any, to be filed by 30 October 2017. Both parties filed and exchanged written submissions and responses by the requested dates and a further hearing was scheduled for 1 December 2017. This hearing was rescheduled by the court and the Company is awaiting notification of a rescheduled date. Separately, Range has received further correspondence from Ms Maharaj on a related matter claiming damages of TT$6,000,000 (approximately US$890,000) on the basis of a conspiracy designed to damage Ms Maharaj's reputation. Again, Range firmly refutes the allegation and in conjunction with its legal counsel in Trinidad has responded to this demand. A claim has been filed by Ms Maharaj seeking damages of TT$6,000,000 (approximately US$890,000) plus interest and costs. The Company, in conjunction with its legal counsel, has filed a defence in respect of this claim and a preliminary hearing was Range Resources Ltd and Controlled Entities ABN 88 002 522 009 81 + Annual Report 2018 Note 27: Contingent liabilities and contingent assets (continued) scheduled for 1 December 2017. This hearing was rescheduled by the court and the Company is awaiting notification of a rescheduled date. While the Company, having taken legal advice, considers the probability of Ms Maharaj succeeding in either of her claims to be remote, there can be no guarantee that there will be a favourable outcome for the Company. Indonesia acquisition Range completed the acquisition of an indirect interest in an established oil block in Indonesia on 30 October 2017. As per terms of the acquisition, the Company has acquired an indirect 42% interest (a 23% indirect equity interest and further 19% indirect economic interest) in the Perlak field located in a mature hydrocarbon province of Northern Sumatra. Please refer to Operations section for further details on the asset. The remaining consideration of US$0.64 million will be payable upon completion of the minimum work obligation. Colombian exploration licences In January 2016, Range received notification from Agencia Nacional de Hidrocarburos (“ANH”) in Colombia advising that the E&P licences over three exploration blocks (PUT-5, VSM-1 and VMM-7) had been revoked. The licences had been awarded to a Consortium of Optima Oil Corporation (“Optima”) and the Company in December 2012. ANH alleges that various obligations and commitments agreed within the exploration licences have not been complied with and also that invalid letters of credit had been presented to ANH by Optima to support the minimum work obligations. The effect of revocation of the licences by ANH is: (i) expiry of the contracts, (ii) Range would be unable to enter into any further agreement with Colombian State for a period of 5 years, (iii) final settlement and liquidation of the licences, and (iv) joint and several liability of the Consortium partners to ANH for all sums due to ANH and for potential damages claim of up to the aggregate financial value of the work commitments of the Consortium for the three licences which totalled approximately US$53 million. The value of the allegedly invalid letters of credit provided was approximately US$11 million. On 1 September 2016, Range received a demand notice from ANH addressed to the Consortium seeking payment of the full amount of the outstanding obligations due to ANH totalling up to approximately US$53 million. The deadline for making the payment, or otherwise responding to ANH with a defence against the action, was 7 September 2016. A comprehensive response was subsequently submitted to ANH by the consortium on this date. This response addressed the numerous areas in which Range and the consortium object to the demand which was received from ANH. A Joint Operating Agreement (“JOA”) is in place amongst the Consortium partners. Under the terms of the JOA it was agreed between the Consortium that it was the sole responsibility of Optima to complete the minimum work obligations and to provide all necessary funding, including the provision of valid letters of credit in favour of ANH. Under the JOA, Range has an indemnity to recover from Optima any payment incurred by Range Resources Ltd and Controlled Entities ABN 88 002 522 009 82 + Annual Report 2018 Note 27: Contingent liabilities and contingent assets (continued) Range for any contractual obligations under the licences which were not paid by Optima. Range has engaged legal advisers in Colombia. Range has no material assets in Colombia. In addition to the ongoing work with legal advisers in Colombia, Range has sought advice from its Australian advisers regarding the ability of ANH to try and enforce a claim against Range in Australia (where Range is incorporated). The Company's legal advisers confirm that there is no provision in Australian law to enable either judgments of Colombian courts, or administrative orders of ANH to be recognised in Australia. If ANH did seek to make any claim in Australia it would be required to commence court proceedings in the Australian courts and to prove its entitlement to such claim. Range would have the right to defend such claim. Range has not received any claim from ANH in Australia and would defend itself against any such claim if ever received. During the year, the Company reached an agreement with ANH to settle all outstanding historic claims and disputes between ANH and the Consortium. The key terms of the settlement arrangement are that ANH confirms that Range (and the Consortium) has no liability for any payments or debts, all proposed penalties have been lifted, the Consortium agrees to waive all potential claims against ANH and the consortium agrees to the termination of the exploration licences. The agreement between the Consortium and ANH is subject to court approval in Colombia. The Directors are not aware of any further contingent liabilities or contingent assets as at 30 June 2018. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 83 + Annual Report 2018 Note 28: Segment reporting 30 June 2018 Segment revenue Total segment revenue Intersegment revenue Revenue from external customers Other income Segment result Depreciation Interest income/(expense) Other segment expenses Loss before income tax Income tax Loss after income tax Segment assets Segment assets Total assets Segment liabilities Segment liabilities Total liabilities 30 June 2017 Segment revenue Revenue from continuing operations Other income Total revenue Segment result Segment expenses Loss before income tax Income tax Loss after income tax Segment assets Segment assets Total assets Segment liabilities Segment liabilities Total liabilities Trinidad – Oil & Gas Production US$ Trinidad – Oilfield Services US$ Indonesia US$ Unallocated US$ Total US$ 12,629,996 3,561,259 - (3,131,833) 12,629,996 429,426 161,828 15,060 - - - - - - - 16,191,255 (3,131,833) 13,059,422 245,009 421,897 (2,374,508) 103,187 (12,044,090) (2,576,158) (498,435) (4,874,421) - - (1,253,329) - (2,704,172) (3,247,456) (4,950,666) (3,099,420) (21,419,296) (1,523,587) (1,827,521) (3,351,108) (7,504,498) 285,317 (7,219,181) (1,253,329) - (1,253,329) (5,706,619) - (5,706,619) (15,988,033) (1,542,204) (17,530,237) 127,047,106 127,047,106 34,469,110 34,469,110 6,077,873 6,077,873 7,896,015 7,896,015 175,490,104 175,490,104 68,336,505 68,336,505 37,226,190 37,226,190 - - 65,433,487 65,433,487 170,996,182 170,996,182 Trinidad – Oil & Gas Production US$ Trinidad – Oilfield Services US$ Indonesia US$ Unallocated US$ Total US$ 8,435,309 96,347 8,531,656 (54,452,224) (45,920,568) (4,999,950) (50,920,518) 132,921,505 132,921,505 103,755,172 103,755,172 - - - - - - - - - - - - - - - - - - - - - - - 78,020 78,020 8,435,309 174,367 8,609,676 (3,520,381) (3,442,361) - (3,442,361) (57,972,605) (49,362,929) (4,999,950) (54,362,879) 17,425,944 17,425,944 150,347,449 150,347,449 26,569,633 26,569,633 130,324,805 130,324,805 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 84 + Annual Report 2018 Note 28: Segment reporting (continued) (i) Unallocated assets Segment assets Cash Other Total segment assets a: Other segment information Segment other revenue – all other segments Other income Total unallocated segment revenue Segment result – all other segments Directors’ and officers’ fees and benefits Share based payments – employee and onsultant shares Discontinued operations Finance costs Other general and administration expenses Total unallocated segment expenses Accounting policies 30 June 2018 US$ 30 June 2017 US$ 3,000,847 4,895,168 7,896,015 17,254,360 171,584 17,425,944 Note Consolidated 2018 (US$) 2017 (US$) 245,009 245,009 78,020 78,020 Note Consolidated 2018 (US$) 2017 (US$) 939,802 1,069,490 (92,466) (32,187) - 2,393,872 2,895,353 6,136,561 1,250,000 792,362 1,510,206 4,589,871 AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The chief operating decision maker is the Chief Executive Officer and through this role the Board of Directors. Following the adoption of AASB 8, the identification of the Group’s reporting segments has changed since the prior period, with management allocating resources to “Trinidad – Oil & Gas Production” and “Trinidad – Oilfield Services” segments. Information regarding these segments is presented above. The accounting policies of the reportable segments are the same as those of the Group. Segment information is prepared in conformity with the accounting policies of the entity as disclosed in Note 1. Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of cash, receivables, plant and equipment, exploration expenditure capitalised and development assets net of accumulated depreciation and amortisation. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used Range Resources Ltd and Controlled Entities ABN 88 002 522 009 85 + Annual Report 2018 Note 28: Segment reporting (continued) jointly by two or more segments is allocated to the segments on a reasonable basis. Segment disclosures do not include deferred income taxes. Revenue from Trinidad – Oil & Gas Production segment of US$12,629,996 (2017: US$8,435,309) is derived from the subsidiary’s sole customer, which is Petroleum Company of Trinidad and Tobago Limited. Intersegment transfers Segment revenues, expenses and results do not include any transfers between segments. Note 29: Cash flow information Note Consolidated 2018 (US$) 2017 (US$) Reconciliation of cash flow from operations with loss after income tax Loss after income tax Non-cash flows in profit Depreciation, depletion and amortisation Share based payment- consultants and employees Impairment of non-current assets Finance costs (non-cash) (92,466) 4,950,666 (17,530,237) (54,362,879) 6,289,324 (32,187) 28,985,014 3,723,917 1,362,426 1,250,000 - - 193,079 - Foreign exchange (gain)/loss Impairments recognised on held for sale assets Fair value movement of derivative Other non-cash items Decrease in other current assets Decrease/(increase) in trade and other receivables (Increase)/decrease in deferred tax asset (Decrease)/increase in trade and other payables Decrease in income tax payable Increase in deferred tax liabilities (Decrease)/increase in provisions Increase/(decrease) in borrowings (Decrease)/Increase in non-current operating payables Net cash outflow (from)/to operations 4 (2,308,556) (494,096) (1,854,276) (2,408,126) 5,479,970 (7,986,854) (6,664,396) (2,893,332) 7,367,699 (11,433,731) - 10,261,798 27,420 - (3,503) 7,946,065 44,048 21,071,631 (2,302,185) 10,345,663 (2,471,484) 1,403,350 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 86 + Annual Report 2018 Note 29: Cash flow information (continued) Financial liability reconciliation 2017 Cash Flows Non-cash changes Fair value changes Interest accrued Acquisition 2018 Borrowings Convertible note Total liabilities from financing activities - - 23,831,365 - 649,860 24,481,225 21,071,631 (1,600,000) - (2,308,556) 2,395,307 19,558,382 21,071,631 (1,600,000) 23,831,365 (2,308,556) 3,045,167 44,039,607 Note 30: Share based payments No options were issued to key management personnel. The expense reversal is due to the change in the probability of meeting the vesting conditions as explained below. Probability of meeting the 1,500 barrels of oil per day for a continuous 15-day period in Trinidad vesting condition is 100%. Probability of meeting the 2,500 barrels of oil per day for a continuous 15-day period in Trinidad vesting condition is 0%. Probability of meeting the 4,000 barrels of oil per day for a continuous 15-day period in Trinidad vesting condition is 0%. The following share-based payment arrangements occurred during the financial year ended at 30 June 2017: Quantity Security US$ Value Purpose 8,000,000(i) Unlisted options 7,096 Options issued to key mangement personnel (i) The value of options have been expensed to the profit or loss on a proportionate basis for each financial year from grant to vesting date. Employee option plan Year ended 30 June 2018 No options were issued to key management personnel, employees and consultants. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 87 + Annual Report 2018 Note 30: Share based payments (continued) Year ended 30 June 2017 The following options were issued to key management personnel, employees and consultants: Name Number of options Grant date Expiry date Key management personnel 8,000,000 29 September 2016 30 March 2020 The value of options have been expensed to the profit or loss on a proportionate basis for each financial year from grant to vesting date. Quantity Security US$ Value Purpose 19,987,481 42,742,654 75,000,000 Fully paid ordinary shares Unlisted options Unlisted options 580,406 1,176,524 85,464 7,500,000 Unlisted options 895,049 Shares issued to employees and consultants Options issued in lieu of consulting fee Options issued to Directors in period Options issued in lieu of consulting fees The fair value at grant date of unlisted options is independently determined using a Black Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. Options granted 1 September 2015 The value per option at the grant date was 0.56 cents for key management personnel options and 0.45 cents for employee options, determined using the Black Scholes option price model using the following key inputs: Volatility: Risk free rate: 100% 1.92% Probability of meeting vesting conditions: Exercise price USD/GBP exchange rate 0. 6509 Share price on grant date 100% £0.01 £0.0057 Options granted 25 May 2016 The fair value of options to be granted have been estimated at 30 June 2016 at 0.30 cents using the Black Scholes options pricing model using the following key inputs: Volatility: Risk free rate: 100% 1.92% Probability of meeting vesting conditions: Exercise price USD/GBP exchange rate 0. 7468 Share price on grant date 100% £0.01 £0.0037 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 88 + Annual Report 2018 Note 30: Share based payments (continued) Expenses recognised in the profit or loss During the year, share-based payments recognised in profit or loss amounts to a reversal of US$92,466 (2017: reversal of US$32,187). 2018 No. 788,844,977 Average exercise price (US$) 0.019 2017 No. 883,055,747 Average exercise price (US$) 0.019 - (27,000,000) - 761,844,977 - 0.025 - 0.023 0.021 - 8,000,000 - (102,210,770) 0.028 0.023 788,844,977 701,845,000 0.025 728,845,000 0.023 153 days 518 days As at 1 July Granted during year: Other Expired Forfeited As at 30 June Vested and exercisable at 30 June Weighted average remaining contractual life options outstanding at end of period Note 31: Related party transactions (a) Parent entity The ultimate Parent Entity and ultimate Australian Parent Entity within the Group is Range Resources Limited. (b) Subsidiaries Interests in subsidiaries are set out in Note 14. (c) Transactions with Key Management Personnel The following transactions occurred during the year with Key Management Personnel or their related parties: Consulting fees paid or payable to Kaiyuan Guosen Management Consulting Limited, a company owned by Mr Gu Consulting fees paid or payable to Plentiful Wise Holdings Limited, a company owned by Ms Wang Consulting fees paid or payable to Ten Faye Limited, a company owned by Mr L Liu Balances at year end to related parties Lijun Xiu and related entities 2018 US$ 2017 US$ 195,000 195,000 112,500 75,000 25,740 39,660 42,000 42,000 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 89 + Annual Report 2018 Note 31: Related party transactions (continued) d: Key Management Personnel compensation Short–term benefits One-off payments Post-employment benefits Termination benefits Share based payments Total Note 32: Parent entity information Note Consolidated 2018 (US$) 2017 (US$) 884,847 - 39,737 - (83,985) 840,599 906,725 104,000 33,315 38,750 14,239 1,097,029 The following details information related to the Parent Entity Range Resources Limited, at 30 June 2018. The information presented here has been prepared in accordance using consistent accounting policies as presented in Note 1. Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Contributed equity Accumulated losses Reserves Total equity Loss for the year from continuing operations Loss for the year from discontinued operations Note Consolidated 2018 (US$) 2017 (US$) 5,823,790 64,091,154 69,914,944 16,760,518 29,029,801 45,790,319 2,176,682 63,244,340 65,421,022 2,852,384 23,245,915 26,098,299 383,918,396 (402,977,948) 23,553,474 4,493,922 383,918,396 (387,637,292) 23,410,916 19,692,020 (15,352,002) (51,299,139) - (1,250,000) Total comprehensive loss for the year (15,352,002) (52,549,139) The contingent liabilities of the parent are included within those of the Group as disclosed in Note 27. The contractual commitments of the parent are included within those of the Group as disclosed in Note 27. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 90 + Annual Report 2018 Note 33: Financial risk management The Group has exposure to the following risks from their use of financial instruments: • Credit risk Liquidity risk • • Market risk This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout these financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed to reflect changes in market conditions and the Group’s activities. The Group, through training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all consultants and agents understand their roles and obligations. Credit risk Credit risk is the risk of financial loss to the Group if counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables and cash held at financial institutions. Credit risk is managed on a group basis. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions. The credit quality of financial assets that are neither past due or impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. Note Consolidated 2018 (US$) 2017 (US$) Cash at bank, restricted deposits and short-term bank deposits (S&P ratings) AAA - AA- A+ BBB+ BBB- Not rated Total 2,509,501 490,986 - 945,196 - - 3,945,683 9 15,971,560 571,294 708,744 - 2,762 - 17,254,360 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 91 + Annual Report 2018 Note 33: Financial risk management (continued) Exposure to credit risk The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was: Trade and other receivables – non-current (i) Trade and other receivables – current (i) Cash and cash equivalents Total (i) Counterparties without an external credit rating. Loans and receivables Note 10 10 9 Consolidated 2018 (US$) 2017 (US$) 2,251,384 4,875,766 3,945,683 11,072,833 6,866,394 5,740,726 17,254,360 29,861,480 The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each debtor. No collateral was held in relation to these receivables. Impairment losses No impairment loss was recognised in relation to other receivables respectively in the prior year. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group uses activity-based costing to cost its activities, which assists in monitoring cash flow requirements and optimising its cash return on investments. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 12 months; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. Group 2018 Carrying amount Contractual cash flows Within one year 1-2 years 2-5 years Financial liabilities at amortised cost Trade and other payables Borrowings Total 44,039,606 102,810,891 60,371,285 60,371,285 42,439,605 102,810,890 9,929,506 50,441,779 1,600,000 42,439,606 11,529,506 91,281,385 - - - Range Resources Ltd and Controlled Entities ABN 88 002 522 009 92 + Annual Report 2018 Note 33: Financial risk management (continued) Group 2017 Carrying amount Contractual cash flows Within one year 1-2 years 2-5 years Financial liabilities at amortised cost Trade and other payables Borrowings Total 21,071,631 74,075,218 53,003,587 54,491,940 24,800,000 79,291,940 11,475,641 - 1,600,000 13,075,641 - 43,466,299 21,600,000 65,066,299 Market risk Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Group’s income or the value of its holdings of available for sale assets. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Equity price risk The Group is exposed to equity securities price risk. This arises from investments held by the Group and classified on the statement of financial position as available for sale as well as from the option liability held as a current liability. A 10% increase in Range’s share price would result in an increase to the option liability of US$3,335. A decrease would have had the equal but opposite effect. Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar, AU dollar, TT Dollar and British pound. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. The Group’s treasury risk management policy is to closely monitor exchange rate fluctuations. To date, the Group has not sought to hedge its exposure to fluctuations in exchange rates, however this policy will be reviewed on an ongoing basis. The Group’s exposure to foreign currency risk at the reporting date was as follows: Cash Amount payable to other entities Total 2018 AUD 2017 AUD 2018 GBP 206,996 327,374 60,911 2017 GBP 268,079 (73,269) (104,555) (50,550) (361,758) 133,727 222,819 10,361 (93,679) Consolidated Sensitivity Based upon the amounts above, had the Australian dollar strengthened by 10% against the US dollar with all other variables held constant, the Group post-tax loss for the year on current amounts receivable/payable would have been US$18,064 higher (2017: US$32,164 higher), mainly as a result of foreign exchange gains/losses on translation of AUD Range Resources Ltd and Controlled Entities ABN 88 002 522 009 93 + Annual Report 2018 Note 33: Financial risk management (continued) denominated payables as detailed in the table above. A 10% weakening of the Australian dollar against the above currencies at 30 June would have had the equal but opposite effect, on the basis that all other variables remain constant. The Trinidad entities are minimally exposed to foreign exchange risk arising from various currencies, primarily with respect to the United States Dollar. Interest rate risk The group’s main interest rate risk arises from non-current receivables. Non-current receivables issued at fixed rates expose the group to fair value interest rate if the loans are carried at fair value. During 2018 and 2017, the group loan receivables were denominated in Australian Dollars, British Pounds and US Dollars. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 94 + Annual Report 2017 Note 33: Financial risk management (continued) Profile At the reporting date, the interest rate profile of the Group’s financial instruments which exposes the group to cash flow interest rate risks are: Weighted Average Effective Interest Rate Floating Interest Rate Fixed Interest Maturing Non-interest bearing Total 2018 2017 % % 2018 US$ 2017 US$ 2018 US$ 2017 US$ 2018 US$ 2017 US$ 2018 US$ 2017 US$ Financial Assets: Cash and cash equivalents 1.8% 0.4% 3,945,683 17,254,360 Trade and other receivables Available for sale financial assets Total financial assets - - - - - - - - 3,945,683 17,254,360 - - - - - - - - - - 3,945,683 17,254,360 7,127,150 12,607,120 7,127,150 12,607,120 - 45,238 - 45,238 7,127,150 12,652,358 11,072,833 29,906,718 Financial Liabilities: Trade and other payables Borrowings Total financial liabilities 10% 6% - 9.3% 8% - - - - - - - 44,602,782 40,851,038 15,768,503 44,039,606 21,071,631 88,642,388 61,922,669 15,768,503 - 12,152,549 - 12,152,549 60,371,285 44,039,606 104,410,891 53,003,586 21,071,631 74,075,217 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 95 + Annual Report 2018 Note 33: Financial risk management (continued) Sensitivity analysis for variable rate instruments The sensitivity on interest rates for 2018 and 2017 assumes a change of 100 basis points in the interest rates at the reporting date and would have increased / (decreased) profit or loss by the amounts shown. Both analyses for each year assume that all other variables, in particular foreign currency rates, remain constant. Group Variable rate instruments Financial assets (cash and cash equivalents) Financial assets (loan and receivables) Weighted Average Interest Rate % 2018 2018 +100 bps US$ -100 bps US$ Weighted Average Interest Rate % 2017 2017 +100 bps US$ -100 bps US$ 1.8% - - - - - 0.4% - - - - - Fair values versus carrying amounts The fair value of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows: Group Available-for-sale financial assets Trade and other receivables Cash and cash equivalents Trade and other payables Borrowings Total 30 June 2018 US$ Carrying amount Fair value 30 June 2017 US$ Carrying amount - - 45,238 Fair value 45,238 7,127,150 7,127,150 12,607,120 12,607,120 3,945,683 3,945,683 17,254,360 17,254,360 (60,371,285) (60,371,285) (53,003,587) (53,003,587) (44,039,606) (44,039,606) (21,071,631) (21,071,631) (93,338,058) (93,338,058) (44,168,500) (44,168,500) The basis for determining fair value is disclosed in Note 1(n). Other price risks The Group is not exposed to any other price risks. Capital management The entity’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. The entity’s overall strategy remains unchanged from 2017. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 96 + Annual Report 2018 Note 33: Financial risk management (continued) The capital structure of the group consists of cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves and accumulated losses as disclosed in Notes 24 and 25 respectively. None of the entities within the group are subject to externally imposed capital requirements. Gearing ratio The Board reviews the capital structure on an annual basis. As a part of this review the Board considers the cost of capital and the risks associated with each class of capital. Financial assets Cash and cash equivalents Other financial assets Financial liabilities Trade and other payables Borrowings Net debt Equity Net debt to equity ratio Categories of financial instruments Financial assets Cash and cash equivalents Trade and other receivables – non-current Trade and other receivables – current Available-for-sale financial assets Financial liabilities Trade and other payables Borrowings Option liability Total Note Consolidated 2018 (US$) 2017 (US$) 3,945,683 2,800,000 17,254,360 - (60,371,285) (44,602,782) (98,228,384) 4,443,822 (53,003,587) (21,071,631) (56,820,858) 20,022,644 2,197.8% 283.8% Note Consolidated 2018 (US$) 2017 (US$) 3,945,683 2,251,384 4,875,766 - 11,072,833 17,254,360 6,866,394 5,740,726 45,238 29,906,718 60,371,285 44,039,606 33,345 104,444,236 52,326,678 21,071,631 341,618 73,739,927 The carrying amount reflected above represents the Group’s maximum exposure to credit risk for such loans and receivables. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 97 + Annual Report 2018 Note 34: Fair value measurement of financial instruments (a) Fair value hierarchy AASB 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: (a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1), (b) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2), and (c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs (level 3). The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value at 30 June 2018 and 30 June 2017 on a recurring basis. At 30 June 2018 Assets Available for sale financial assets Equity securities Total assets Liabilities Option liability at fair value through profit or loss Derivative liability at fair value through profit or loss Total liabilities At 30 June 2017 Assets Available for sale financial assets Equity securities Total assets Liabilities Option liability at fair value through profit or loss Derivative liability at fair value through profit or loss Total liabilities Level 1 US$ Level 2 US$ Level 3 US$ Total - - - - - Level 1 US$ - - 33,345 384,007 417,352 Level 2 US$ - - - - - Level 3 US$ - - 33,345 384,007 417,352 Total - - - - - - - 45,238 45,238 45,238 45,238 341,618 2,692,563 3,034,181 - - - 341,618 2,692,563 3,034,181 The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the end of the reporting period. There were no transfers between the levels of the fair value hierarchy during the year ended 30 June 2018. (b) Fair values of other financial instruments The Group has financial instruments which are measured at amortised cost in the consolidated statement of financial position. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 98 + Annual Report 2018 Note 34: Fair value measurement of financial instruments (continued) Due to their short-term nature, the carrying amounts of the current receivables, current payables, current borrowings, and current other financial liabilities is assumed to approximate their fair value. (c) Fair values of non-current receivables, payables and borrowings For non-current receivables, payables and borrowings, the fair values are not materially different to their carrying amounts since the interest on these balances is close to current market rates. Note 35: Events after the reporting date Completion of US$1.3m subscription Subsequent to the year end, Range announced a subscription for new ordinary shares to raise US$1,300,000 million before expenses (the "Subscription"). Pursuant to the Subscription, the Company issued 909,090,910 new ordinary shares at a price of 0.11 pence per new ordinary share. The Company intends to use the proceeds from the Subscription to fund sales infrastructure upgrade, as well as other general investment in asset upgrades in Trinidad. Georgia update Subsequent to the year end, Range signed an agreement to acquire Georgian Oil Pty Ltd (20% interest holder in SOG) for a nominal upfront sum. Following completion, Range will hold a 65% interest in SOG. Completion is anticipated to occur in October 2018. Other than the above, no events occurred after the reporting date. Note 36: New accounting Standards and interpretations Australian accounting Standards/amendments released but not yet effective: 30 June 2018 year end Certain new accounting Standards and Interpretations have been published that are not mandatory for 30 June 2018 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new Standards and Interpretations is set out below. In all cases the Group intends to apply these standards from the application date as indicated in the tables below. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 99 + Annual Report 2018 Note 36: New accounting Standards and interpretations (continued) Reference: Standard application date: Group application date: AASB 9 Financial Instruments Title: 1 January 2018 1 July 2018 Key Requirements AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities and introduces new rules for hedge accounting. In December 2014, the AASB made further changes to the classification and measurement rules and also introduced a new impairment model. These latest amendments now complete the financial instruments standard. Impact Management is currently assessing the impact of the new rules. At this stage, the Group is not able to estimate the impact of the new rules on the Group’s financial statements. The Group will make more detailed assessments of the impact over the next 12 months. Reference: Standard application date: Group application date: AASB 15 Revenue from Contracts with Customers Title: 1 January 2018 1 July 2018 Key Requirements The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers contracts for goods and services and AASB111 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer, so the notion of control replaces the existing notion of risks and rewards. The standard permits a modified retrospective approach for the adoption. Under this approach entities will recognise any applicable transitional adjustments in retained earnings on the date of the initial application without restating the comparative period. Entities will only need to apply the new rules to contracts that are not completed as of the date of initial application. Impact Management is currently assessing the impact of the new rules. At this stage, the Group is not able to estimate the impact of the new rules on the Group’s financial statements. The Group will make more detailed assessments of the impact over the next 12 months. Range Resources Ltd and Controlled Entities ABN 88 002 522 009 100 + Annual Report 2018 Note 36: New accounting Standards and interpretations (continued) Reference: Standard application date: Group application date: AASB 16 Leases Title: 1 January 2019 1 July 2019 Key Requirements The key features of AASB 16 are as follows: Lessee accounting • Lessees are required to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of a low value. • A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly to other financial liabilities. • Assets and liabilities arising from a lease are initially measured on a present value basis. The measurement includes non-cancellable lease payments, and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. • AASB 16 contains disclosure requirements for leases. Lessor accounting AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. AASB 16 also requires enhanced disclosures to be provided by lessors that will improve information disclosed about a lessor’s risk exposure, particularly to residual value risk. Impact Management is currently assessing the impact of the new rules. At this stage, the Group is not able to estimate the impact of the new rules on the Group’s financial statements. The Group will make more detailed assessments of the impact over the next 12 months. There are no other standards that are not yet effective and that would be expected to have a material impact on Range in the current or future period and on foreseeable future transactions. Note 37: Company details The registered office of the company is: c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace, Perth WA 6000 Telephone: +61 8 6205 3012 The principal place of business is: c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace, Perth WA 6000 Telephone: +61 8 6205 3012 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 101 + Annual Report 2018 + Directors’ Declaration The directors of the company declare that: • • • • The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity, accompanying notes, are in accordance with the Corporations Act 2001 and: • comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and • give a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance for the year ended on that date. The company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards. In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A. This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by: Zhiwei Gu Chairman 28 September 2018 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 102 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia INDEPENDENT AUDITOR'S REPORT To the members of Range Resources Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Range Resources Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to Note 1 in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this matter. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Impairment assessment of Trinidad-Oil & Gas Production CGU Key audit matter How the matter was addressed in our audit As disclosed in Notes 15b, 16 and 18, the Group Our procedures included but were not limited to the has significant non-current assets relating to the following: Trinidad – Oil and Gas Production cash generating unit (CGU). Management’s impairment assessment of these assets was based on the CGU’s fair value less costs to sell using a discounted cash flow model. - Assessing the appropriateness of the Group’s categorisation of its CGU and allocation of assets; - Assessing the competency of management's expert who conducted an assessment of the reserves; - Obtaining an understanding of the discounted cash The impairment assessment is a key audit matter flow model and assumptions used, including: due to the significant judgements and estimates as disclosed in Note 15b. (cid:131) (cid:131) analysing management’s oil price assumptions against external data; assessing the reasonableness of the expected future operating and production costs and production forecasts; and (cid:131) checking the reasonableness of the discount rate applied. We also assessed the adequacy of the related disclosures in Note 15b to the financial statements. Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included on pages 31 to 40 of the directors’ report for the year ended 30 June 2018. In our opinion, the Remuneration Report of Range Resources Limited, for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (WA) Pty Ltd Jarrad Prue Director Perth, 28 September 2018 + Annual Report 2018 + ASX additional information Shareholder information Additional information required by the Australian Securities Exchange Listing Rules and not disclosed elsewhere in this Annual Report is set out below. Top 20 shareholders The 20 largest shareholders of the Company as at 31 August 2018 are listed below: Rank Shareholder Number of shares Percentage held (%) Beijing Sibo Investment Management LP 2,447,620,912 28.8 1. 2. 3. 4. 5. 6. 7. 8. 9. 11. 12. Abraham Limited 712,377,560 Interactive Investor Services Nominees Limited 682,310,005 Barclays Direct Investing Nominees Limited 558,381,641 Interactive Investor Services Nominees Limited 487,025,885 HSDL Nominees Limited Hargreaves Lansdown (Nominees) Limited <15942> Cantor Fitzgerald Europe ABN AMRO Bank NV <7KKAVTE> 10. HSDL Nominees Limited Hargreaves Lansdown (Nominees) Limited 264,889,797 255,898,910 236,411,453 183,529,411 171,599,095 156,662,973 Hargreaves Lansdown (Nominees) Limited 137,868,385 13. Wealth Nominees Limited 107,266,606 14. Share Nominees Ltd 15. HSBC Client Holdings Nominee (UK) Limited <731504> 88,329,117 87,173,858 16. Citicorp Nominees Pty Limited 71,664,185 17. J P Morgan Nominees Australia Limited 69,958,438 18. Wealth Nominees Limited 68,415,793 19. Lawshare Nominees Limited 57,493,956 8.4 8.0 6.6 5.7 3.1 3.0 2.8 2.2 2.0 1.8 1.6 1.3 1.0 1.0 0.8 0.8 0.8 0.7 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 106 + Annual Report 2018 Rank Shareholder Number of shares Percentage held (%) 20. James Capel (Nominees) Limited 54,320,377 Total 6,899,198,357 0.6 81.1 Substantial shareholders An extract of the Company’s register of substantial shareholders (being those shareholders who held 5% or more of the issued capital on 31 August 2018) is below: Shareholder Number of shares Percentage held (%) Beijing Sibo Investment Management LP 2,447,620,912 28.8 Abraham Limited Interactive Investor Services Nominees Limited Barclays Direct Investing Nominees Limited Interactive Investor Services Nominees Limited 712,377,560 682,310,005 558,381,641 487,025,885 8.4 8.0 6.6 5.7 Distribution of equity securities There were 2,302 holders of less than a marketable parcel of ordinary shares (being 109,940,038 shares on 31 August 2018). The number of shareholders by size of holding is set out below: Size of holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Number of holders 214 332 288 1,136 814 2,784 Number of shares 69,017 1,038,035 2,352,603 53,679,737 8,447,782,300 8,504,921,692 Range Resources Ltd and Controlled Entities ABN 88 002 522 009 107 + Annual Report 2018 Tenement schedule The tenement schedule for the Group as at 30 June 2018 is tabulated below: Location Tenement Reference Trinidad Morne Diablo Trinidad South Quarry Trinidad Beach Marcelle St Mary’s Block Trinidad Guayaguayare Shallow1 Trinidad Trinidad Guayaguayare Deep1 Indonesia Perlak2 Percentage held (%) 100 100 100 80 65 80 23 Operator Range Range Range Range Range Range PT Aceh Timur Kawai Energi Notes: 1. The Production Sharing Contracts relating to Guayaguayare expired in 2015. Any renewal will be subject (inter alia) to government and other regulatory approvals. 2. Range’s indirect interest in the Perlak field is held through its 60% shareholding in Hengtai, which holds a 78% interest in Lukar which in turn holds a 49% interest in PT Aceh Timur Kawai Energi. 3. Range believes that it holds an interest in the Georgia Production Sharing Contract over Block VIA (the “Georgia PSC”) through its 45% shareholding in Strait Oil and Gas Limited (“SOG”). Range believes that it holds an indirect interest in the hydrocarbons exploration and exploitation contract relating to Block 1-2005 covering the Atzam and Tortugas fields in Guatemala, through its shareholding of between 10-20% in Latin American Resources Ltd (“LAR”). Range Resources Ltd and Controlled Entities ABN 88 002 522 009 108 + Annual Report 2018 + Corporate Directory Zhiwei Gu Non-Executive Chairman Yan Liu Executive Director and CEO Lubing Liu Executive Director and COO Juan Wang Non-Executive Director Yi Zeng Non-Executive Director s r o t c e r i D Company Secretary Nick Beattie and Sara Kelly Registered office & principal place of business c/o Edwards Mac Scovell, Level 7, 140 St Georges Terrace Perth WA 6000, Australia Telephone: +61 8 6205 3012 Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace, Perth WA 6000 Telephone: +61 3 9415 4000 Computershare Investor Services plc PO Box 82, The Pavilions, Bridgwater Road, Bristol, UK BS99 6ZZ Telephone: +44 370 702 0000 BDO Audit (WA) Pty Ltd, 38 Station Street; Subiaco WA 6008, Australia Range Resources Limited shares are listed on the Australian Securities Exchange (ASX code: RRS) and Alternative Investment Market of the London Stock Exchange (AIM code: RRL) Australia www.rangeresources.co.uk Share Registry (Australia) Share Registry (United Kingdom) Auditor Stock Exchange Listing Country of Incorporation Website Range Resources Ltd and Controlled Entities ABN 88 002 522 009 109 

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